Report Latin America Leads the World in Preference for Centralized Exchanges

Latin America Dominates Global Preference for Centralized Exchanges, New Report Shows

Author: Ciaran Lyons, Cointelegraph; Translation: Songxue, LianGuai

According to a recent report by blockchain analysis company Chainalysis, Latin America is more inclined towards centralized exchanges (CEX) rather than decentralized exchanges (DEX) compared to other regions of the world.

The report, released on October 11th, points out that Latin America has the seventh largest cryptocurrency economy in the world, lagging behind the Middle East and North America (MENA), East Asia, and Eastern Europe.

However, it notes that Latin American cryptocurrency users strongly support the use of CEX:

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“Latin America shows the highest preference for centralized exchanges among all the regions we studied and is slightly off from institutional activity compared to other regions.”

Furthermore, in certain countries in the region, the distribution of cryptocurrency activity based on platform types significantly favors CEX compared to the global average.

Globally, the average preference for cryptocurrency platforms is 48.1% for CEX, 44% for DEX, and 5.9% for other decentralized financial (DeFi) activities.

Percentage of cryptocurrency activity in Latin American countries based on platform types. Data source: Chainalysis

However, in Venezuela, the preference for CEX is significantly higher at 92.5%, while the preference for DEX is much lower at 5.6%.

Chainalysis emphasizes that the surge in adoption in Venezuela has a unique reason, primarily attributed to a “complex humanitarian emergency.”

The report explains that cryptocurrency played a crucial role in directly assisting healthcare professionals in the country during 2020.

Due to political reasons, the government refused to accept international aid, making traditional payments difficult, and hence, cryptocurrency became necessary.

On the other hand, in Colombia, the preference for CEX is 74%, while DEX accounts for only 21.1% of its preference.

However, in terms of cryptocurrency trading volumes, Argentina leads in Latin America, estimated to have received $85.4 billion in transaction value in the 12 months leading up to July 1st.

Latin America: Countries ranked by received cryptocurrency value. Data source: Chainalysis

On May 5th, there were reports that the Central Bank of Argentina banned payment providers from offering cryptocurrency transactions to reduce the country’s exposure to digital assets in its payment system.

The authorities stated that the purpose of this move is to subject fintech companies to the same regulations as traditional financial institutions in Argentina.

At the same time, three Latin American countries have made it into the top 20 in Chainalysis’ global cryptocurrency adoption index. Brazil ranks 9th, Argentina ranks 15th, and Mexico ranks 16th.

In addition, India is in first place, with Nigeria and Vietnam ranking second and third respectively.

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