South Africa’s DeFi Sector Projected to Reach $180 Million by 2028

A report by the FSCA indicates that South Africa’s DeFi sector may reach $180 million by 2028, highlighting the nation’s prominent role in crypto adoption. With an annual revenue of $2.8 million mainly from retail clients, the sector shows potential for expansion driven by financial inclusion and low transaction costs, despite inherent risks that necessitate regulatory measures for user protection.

The DeFi sector in South Africa is poised to reach $180 million by 2028, according to a report from the Financial Sector Conduct Authority (FSCA). This report highlights South Africa’s significant role in crypto adoption and regulation within Africa. The study aims to equip local regulators with insights into the evolving dynamics of DeFi and its influence on the economy, particularly regarding the relationship between traditional banks and crypto service providers.

Currently, the South African DeFi sector generates an estimated annual revenue of $2.8 million, with retail clients making up 71% of the participants. Key growth drivers include enhanced financial inclusion, lower transaction costs, and greater transparency offered by DeFi platforms. However, the sector’s expansion brings notable risks, such as price manipulation and security breaches, necessitating a comprehensive regulatory framework to protect users.

Finding effective measures for user protection is critical, and survey respondents highlighted improved regulation and enhanced financial literacy as vital solutions. Over a third of respondents believe the total value locked (TVL) in South African DeFi exceeds $27 million, reflecting the sector’s growth potential against a backdrop of increasing global interest.

The report identifies significant use cases for DeFi within South Africa, with over half of the respondents using crypto for payments, followed closely by lending and borrowing at 47.6%. Other popular uses include decentralized exchanges and asset management, indicating the role of DeFi in enhancing banking services and enabling tokenization in traditional finance scenarios.

Furthermore, major drivers of market growth include rising interest from mainstream investors and the emergence of new protocols. While the report is aimed at helping regulators understand the sector better, it also illustrates South Africa’s pivotal position as an emerging crypto hub, supported by government initiatives and favorable regulations implemented in recent years.

The local crypto landscape has transformed significantly with the recognition of cryptocurrency as a legitimate financial product in October 2022, promoting a conducive environment for investment. South Africa’s crypto market was valued at $26 billion in 2023, alongside a notable shift towards stablecoins for everyday transactions. Experts anticipate that upcoming elections in May 2025 will not disrupt the favorable regulatory landscape for the crypto sector.

In summary, the South African DeFi sector is on track for substantial growth, anticipated to reach $180 million by 2028. This development is driven by factors such as enhanced financial inclusion, reduced transaction costs, and growing adoption among retail and institutional investors. However, addressing inherent risks through proper regulation and education is vital to ensure the secure advancement of this rapidly evolving sector.

Original Source: crypto.news