On Monday, an analyst suggested that Apple (AAPL), the world’s largest publicly traded company with a $2.3 trillion market capitalization, should launch its cryptocurrency exchange.
RBC Capital Market, a brokerage firm, said that Apple Wallet could quickly generate over $40 billion by adopting cryptocurrency since it has an install base of about 1.5 billion people in an increasingly cashless society since the coronavirus pandemic hit in early 2020
The analyst, Mitch Steves, lifted RBC’s price target for the iPhone maker to $171 from $154, insinuating a 25% rise from Apple’s close on Friday. The target is the highest among Wall Street analysts while Steves also maintained an “outperform” rating on the shares.
Profitable Opportunity for Apple
According to the RBC Capital Markets research report, Apple Inc has a “certain opportunity” to offer a trading mechanism for cryptocurrencies. The move would allow the company to gain market share immediately
The report also noted that Apple would quickly solve issues individuals face getting crypto assets due to KYC laws and other company regulations. Furthermore, it would allow a closed system that prevents criminal activity and polishes asset security. Apple has instant access to buyers and sellers since it can tap into world-class software and a secure ecosystem.
It added that if Apple went down this path, it would possibly make the U.S. a global leader in crypto assets.
RBC said that Apple already has a Wallet app, which contributes to the increasingly vital business services. However, expanding into the crypto sector could make it an even more significant boon. According to the team, opening the Wallet app to purchase and sell cryptocurrency could cement Apple as a leader in the industry and bolster its revenue.
Analysts suggest that Apple pay for the developing costs of an Apple crypto exchange (about $500 million, an estimate) by adding bitcoin to the tech giant’s balance sheet.
The analysts wrote that if the company purchased $5 billion of bitcoin (20-25 days of cash flow), the price of the underlying asset would need to rise by 10% for the company to fully fund the entire project. Further, this is a solid value proposition in RBC’s view as the business gets funding without diluting any other firm projects.
Boosting U.S.A’s Confidence
The analysts pointed out that Apple developing a crypto exchange could also reduce the likelihood the U.S. bans bitcoin in the future. In their opinion, if Apple took this path, the U.S. would likely acquire the most crypto assets from a global perspective. If the country acquires the highest number of crypto assets owners, banning the crypto would be out of the question. Besides, with Apple’s advanced security and technology, the U.S. would have valuable information and balance confidence if needed in the future.