Latin America Prefers Centralized Exchanges Over Decentralized Exchanges, Says Chainalysis Report
A recent report from blockchain analytics firm Chainalysis reveals that Latin America has a higher preference for centralized exchanges compared to decentralized exchanges, setting it apart from the rest of the world.
According to the report published on October 11, Latin America holds the seventh-largest crypto economy globally, closely following regions such as the Middle East and North America, Eastern Asia, and Eastern Europe.
However, the report highlights that crypto users in Latin America strongly favor 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.”
Moreover, in some countries within the region, the preference for centralized exchanges surpasses the global average significantly.
On a global scale, centralized exchanges account for 48.1% of platform preferences, while decentralized exchanges make up 44% and other decentralized finance (DeFi) activities make up 5.9%.
In Venezuela, there is a particularly high preference for centralized exchanges at 92.5%, with decentralized exchanges only capturing 5.6% of user preferences.
The report attributes this surge in adoption to Venezuela’s “complex humanitarian emergency” and explains that during the COVID-19 pandemic in 2020, crypto played a crucial role in directly assisting healthcare professionals when traditional payments were challenging due to political reasons.
Different Preferences Across Latin American Countries
Colombia also exhibits a strong preference for centralized exchanges at 74%, with decentralized exchanges accounting for just 21.1% of user preferences.
On the other hand, Argentina leads in terms of cryptocurrency transactions volume in Latin America, with an estimated $85.4 billion received during the 12-month period ending on July 1.
Three Latin American countries secured positions in the top 20 ranks on Chainalysis’ Global Crypto Adoption Index. Brazil holds the 9th position, followed by Argentina at 15th, and Mexico at 16th.
At the global level, India claims the leading spot, while Nigeria and Vietnam secure second and third positions, respectively.
Hot Take: Latin America’s Centralized Exchange Preference Driven by Unique Factors
The Chainalysis report sheds light on Latin America’s distinct inclination toward centralized exchanges. The region’s high preference for centralized exchanges can be attributed to various factors such as political instability, complex humanitarian emergencies like Venezuela’s case, and the role of crypto in providing alternative financial solutions during crises. While decentralized exchanges gain popularity globally, Latin America’s unique circumstances have led to a higher reliance on centralized exchanges. Understanding these preferences is essential for crypto businesses aiming to tap into the Latin American market and cater to the specific needs of users in the region.
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