Latin America, according to a recent report by blockchain analytics firm Chainalysis, exhibits a strong preference for centralized exchanges (CEXs) over decentralized exchanges (DEXs) when it comes to cryptocurrency trading.
Despite having the seventh-largest crypto economy globally, Latin America lags behind regions like the Middle East and North America (MENA), Eastern Asia, and Eastern Europe.
The report, published on October 11, reveals that the crypto community in Latin America has a distinct leaning towards CEXs.
Chainalysis notes, “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.”
In some countries within the region, this preference for CEXs is even more pronounced when compared to the global average.
Worldwide, 48.1% of crypto users prefer CEXs, 44% opt for DEXs, and 5.9% engage in other decentralized finance (DeFi) activities.
However, in Venezuela, an astonishing 92.5% of users prefer CEXs, while only 5.6% favor DEXs.
The report attributes Venezuela’s strong adoption of crypto to its unique circumstances, particularly a “complex humanitarian emergency.”
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During the COVID-19 pandemic in 2020, cryptocurrency played a crucial role in providing direct assistance to healthcare professionals in the country.
Traditional payment methods were impractical due to the government’s reluctance to accept international aid for political reasons.
Colombia also exhibits a significant preference for CEXs, with 74% of users favoring them over DEXs, which account for just 21.1% of preferences.
Meanwhile, Argentina leads in terms of cryptocurrency transaction volume in Latin America, with an estimated $85.4 billion received in a 12-month period ending on July 1.
However, the country has faced regulatory challenges, with its central bank banning payment providers from offering crypto transactions to reduce exposure to digital assets.
This move aimed to subject fintech companies to the same regulations as traditional financial institutions.
Despite these challenges, three Latin American countries secured positions in the top 20 ranks on Chainalysis’ Global Crypto Adoption Index.
Brazil holds the ninth position, followed by Argentina at 15th and Mexico at 16th.
The top position globally was claimed by India, with Nigeria and Vietnam ranking second and third, respectively.
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