Only 10% of FSPs Generate Income From Regulated and Unregulated Financial Services
A recent study conducted by the South African financial services industry watchdog has found that only 10% of crypto asset financial service providers (FSPs) derive their income from both regulated and unregulated financial services. The study surveyed 47 crypto asset FSPs and discovered that approximately 46% generated revenues between $53,000 and $2.68 million, while 38% received revenue of less than $53,000. Only 5% of the FSPs were generating revenue between $8 million and $10 million.
Reasons for the Study
The Financial Sector Conduct Authority (FSCA) conducted the study to gather information that would support its work in understanding consumer exposure to crypto assets and identifying potential risks. The goal is to ensure consumer well-being within the crypto market.
FSP Services and License Applications
Among the surveyed FSPs, 49% reported operating a crypto exchange, 19% provided advisory services for crypto assets, 15% identified as crypto brokers, and only 2% offered custodial services. The FSCA also received 93 license applications from FSPs and new applicants, with some deciding to operate outside of South Africa in foreign jurisdictions.
Hot Take: FSPs Face Revenue Challenges in the Crypto Market
The study reveals that a majority of crypto asset FSPs generate income from trading fees, with revenue models similar to traditional financial services. However, only a small percentage of FSPs are able to generate significant revenue in the range of $8 million to $10 million. This highlights the challenges FSPs face in generating substantial income within the crypto market.
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