Oxidase that catalyzes the conversion of cysteine to 3-oxoalanine on target proteins. 3-oxoalanine modification, which is also named formylglycine (fGly), occurs in the maturation of arylsulfatases and some alkaline phosphatases that use the hydrated form of 3-oxoalanine as a catalytic nucleophile. 2 a thiol + L-cysteinyl-[sulfatase] + O2 = 3-oxo-L-alanyl-[sulfatase] + an organic disulfide + H(+) + H2O + hydrogen sulfide The catalytic copper is required to activate oxygen and catalyze oxidative C-H activation. kcat is 1.6 min(-1) in presence of Cu(+). Protein modification; sulfatase oxidation. Belongs to the sulfatase-modifying factor family.