According to Chainalysis, Latin American crypto users show a significant preference for centralized exchanges, in contrast to the worldwide pattern.
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 using 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.
Furthermore, in some countries within the region, crypto activity by platform type significantly exceeds the global average.
The worldwide average for preferences regarding crypto platforms stands at 48.1% for centralized exchanges, 44% for decentralized exchanges, and 5.9% for other decentralized finance (DeFi) activities.
However, in Venezuela, the preference for centralized exchanges is significantly high at 92.5%, while decentralized exchanges have a much lower 5.6% preference.
Furthermore, it pointed out 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.
Related: Crypto adoption is booming, but not in the US or Europe — Bitcoin Builders 2023
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, while decentralized exchanges 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 at the 9th position, with Argentina following at 15th, and Mexico at 16th.
Yet, India took the top position, with Nigeria and Vietnam following in second and third place, respectively.
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