When Bitcoin nearly reach the 20.000 USD the catalyst was its own meteoric rise and the many news articles that came with this new popular technology. Since then markets have cooled down considerably and it feels like everything is just waiting.
Europe in the meantime has been working on PSD2. A new set of regulations following SEPA in 2014 which are supposed to open up the markets to new players. Part of the new regulations require banks to open up their back end to new parties and other banks and aren’t allowed to hoard their information anymore. There are many challenges that accompany such a new required change, one of which is that right now banks talk through API’s and they aren’t speaking the same language as explained here: https://diginomica.com/2018/03/02/psd2-and-the-api-challenge-for-open-banking/
The EU when making new laws tells people and companies what needs to be done but doesn’t specify the how. It told financial institutions to use the same formats to talk to each other but didn’t specify which format that should be. The effect is that people still don’t bank across the border, or get insurance or use any of the competitive advantages that consumers should be able to get from open borders. We are seeing something similar happening now. PSD2 requires banks to open up their back end, and sets requirements on how consumer data needs to be protected (Strong customer authentication and regulatory Technical standards) but doesn’t tell banks how to achieve this. How do you allow for third parties to access your data, make changes to your data but only the changes you allow them to make? And furthermore, these rights are different per third party.
We have already been able to read careful articles about banks looking into blockchain technology, and we have seen aggressive marketing done by Crypto companies pushing this technology. But we rarely read what is actually happening here. Example: https://www.ft.com/content/615b3bd8-97a9-11e7-a652-cde3f882dd7b
We also see that many banks are already getting used to blockchain technology for other purposes such as described by Ripple: https://ripple.com/files/xrp_cost_model_paper.pdf
So with connections already made and back ends already adapted, a follow up step for a bank to use blockchain technology for their API connection and back end security is not farfetched.
So let’s look at how this affects the cryptocurrencies markets. Cryptocurrencies are linked to blockchain technology and major news regarding this technology will have an effect on the price. Despite being false, blockchain usage is seen by many people as cryptocurrency utility. So in a market where volumes have been dropping and news articles have become fewer and further in between a next boom would require a new catalyst to get the interest back again. There are many things that could work as a catalyst and PSD2 could be one of them.
With the EU narrowing scopes of projects and delaying the deadlines it is unclear on if this would end up being an option and if so when this would happen, but it is a clear time-lined scenario which you can keep in mind as a possible catalyst for a new bull market.