Cryptocurrency News

Latin America takes global lead in preference for centralized exchanges: Report

811cc82e e892 4485 9605 bf5c79b7d2ce

According to a recent report from blockchain analytics firm Chainalysis, Latin America has a distinct inclination toward centralized exchanges when compared to the rest of the world, as opposed to decentralized exchanges.

Published on October 11, Chainalysis stated that Latin America has the seventh-largest crypto economy in the world, trailing closely behind the Middle East and North America (MENA), Eastern Asia, and Eastern Europe.

However, it notes that crypto users in Latin America strongly favor utilizing centralized exchanges:

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.

dd8355db fd15 4bdb 9212 e5c761b3f70d
Latin America: Countries by crypto value received. Source: Chainalysis

In some countries within the region, crypto activity by platform type significantly exceeds the global average. The worldwide average is 48.1% for centralized exchanges, 44% for decentralized exchanges, and 5.9% for other decentralized finance (DeFi) activities.

However, Venezuela shows a 92.5% preference for centralized exchanges, compared to a 5.6% preference for decentralized exchanges (DEXs).

Furthermore, it pointed out that Venezuela has a unique reason for its surging adoption, primarily attributed to a “complex humanitarian emergency.”

Related: Crypto adoption is booming, but not in the US or Europe — Bitcoin Builders 2023

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 a necessary form of value 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 centralized exchanges (CEXs), while decentralized exchanges (DEXs) account for just 21.1% of their preferences.

4a2c9dc5 bdfd 48df 8bb9 3c44a4e86d75
Share of Latin America country crypto activity by platform type. Source: Chainalysis

Meanwhile, three Latin American countries secured positions in the top 20 ranks on Chainalysis Global Crypto Adoption Index. Brazil stands at the 9th position, with Argentina following at 15th, and Mexico at 16th.

At the global level, India claims the leading spot, with Nigeria and Vietnam securing second and third positions, respectively.

Magazine: The Truth Behind Cuba’s Bitcoin Revolution: An on-the-ground report