In a recent analysis, the blockchain analytics company Chainalysis found that Latin America has a tendency to favor centralized exchanges (CEXs) over decentralized exchanges (DEXs) in comparison to the rest of the globe. According to a research released on October 11 and trailing only the Middle East and North America (MENA), Eastern Asia, and Eastern Europe in terms of global crypto economy size, Latin America has the seventh-largest market. It does point out that CEXs are highly preferred by Latin American cryptocurrency consumers.
“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.” The report stated.
Additionally, relative to the worldwide average, there is a considerable skewed distribution of crypto activity by platform type toward CEXs in some nations within the area. The average preference for crypto platforms globally is 48.1% for CEXs, 44% for DEXs, and 5.9% for additional decentralized financial (DeFi) activities.
However, in Venezuela, the preference for CEXs is far higher—92.5%—than that for DEXs, which is only 5.6%. Chainalysis emphasized that Venezuela’s unusual cause for its rapid adoption is partly related to a “complex humanitarian emergency.” According to the research, cryptocurrency was crucial in helping the nation’s healthcare workers directly during the COVID-19 epidemic in 2020.
As a result, crypto became essential because regular payments were challenging due to the government’s political-influenced refusal to accept outside aid. However, Colombia displays a 74% preference for CEXs whereas only 21.1% of their preferences are for DEXs. Argentina, with an estimated $85.4 billion in bitcoin transactions during the calendar year that ended on July 1, leads Latin America in terms of sheer volume.
The central bank of Argentina reportedly prohibited crypto transactions on May 5 in order to lessen the exposure of the nation’s payment system to digital assets. According to the monetary authority, this was done in order to hold fintech companies in Argentina to the same standards as traditional financial institutions. On Chainalysis’ Global Crypto Adoption Index, three Latin American nations earned spots among the top 20. In ninth place is Brazil, followed by Argentina in 15th and Mexico in 16th. India came in first, followed by Vietnam in second place and Nigeria in third.