According to Chainalysis, Latin American crypto users significantly prefer centralized exchanges, in contrast to the rest of the world.
3077 Total views
43 Total shares
According to a recent report from blockchain analytics firm Chainalysis, Latin America has an inclination toward centralized exchanges (CEXs) over decentralized exchanges (DEXs) compared with the rest of the world.
Published on Oct. 11, the report stated that Latin America has the seventh-largest crypto economy in the world, trailing the Middle East and North America (MENA), Eastern Asia and Eastern Europe.
However, it notes that crypto users in Latin America strongly favor using CEXs:
“Latin America shows the highest preference for centralized exchanges of any region we study, and tilts slightly away from institutional activity compared to other regions.“
Furthermore, in certain countries within the region, the distribution of crypto activity by platform type is significantly skewed toward CEXs vs. the global average.
The worldwide average for preferences regarding crypto platforms stands at 48.1% for CEXs, 44% for DEXs and 5.9% for other decentralized finance (DeFi) activities.
However, in Venezuela, the preference for CEXs is significantly higher at 92.5%, while DEXs have a much lower 5.6% preference.
Chainalysis highlighted that Venezuela has a unique reason for its surging adoption, primarily attributed to a “complex humanitarian emergency.“
The report explains that amid the COVID-19 pandemic in 2020, crypto played a pivotal role in directly assisting healthcare professionals in the country.
Therefore, crypto became necessary as traditional payments were difficult given the government’s refusal to accept international aid, influenced by political reasons.
On the other hand, Colombia shows a 74% preference for CEXs, while DEXs account for just 21.1% of their preferences.
However, Argentina leads in terms of the sheer volume of cryptocurrency transactions in Latin America, having received an estimated $85.4 billion during the 12-month period ending on July 1.
On May 5, Cointelegraph reported that Argentina’s central bank banned payment providers from offering crypto transactions to reduce the country’s payment-system exposure to digital assets.
The monetary authority stated that the purpose of this was to subject fintech companies to the same regulations as conventional financial institutions in Argentina.
Meanwhile, three Latin American countries secured positions in the top 20 ranks on Chainalysis’ Global Crypto Adoption Index. Brazil stands in ninth position, with Argentina following at 15th and Mexico at 16th.
India took the top position, with Nigeria and Vietnam in second and third, respectively.