In a recent report from Chainalysis, Latin America has emerged as a dominant player in the global cryptocurrency landscape, with a clear preference for centralized exchanges (CEXs) over decentralized exchanges (DEXs) compared to the rest of the world.
Centralized Exchanges Preferred in Latin America
The report, published on October 11, highlights that Latin America ranks as the seventh-largest cryptocurrency economy globally, trailing behind regions like the Middle East and North America, Eastern Asia, and Eastern Europe. However, the standout finding is Latin America’s strong inclination toward centralized exchanges. The report 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.”
Venezuela’s Unique Adoption Amid Complex Humanitarian Emergency
The data reveals that within certain Latin American countries, the preference for CEXs is notably higher than the global average. In Venezuela, centralized exchanges are favored by a striking 92.5% of crypto users, with DEXs accounting for just 5.6% of preferences. This phenomenon is attributed to Venezuela’s complex humanitarian emergency, where crypto played a pivotal role during the COVID-19 pandemic. Traditional payments were challenging due to the government’s reluctance to accept international aid for political reasons.
Share of Latin America country crypto activity by platform type. Source: Chainalysis
Colombia demonstrates a strong preference for CEXs, with 74% of users favoring them over DEXs, which constitute only 21.1% of preferences. On the other hand, 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. However, the country’s central bank imposed a ban on payment providers offering crypto transactions to mitigate exposure to digital assets, subjecting fintech companies to the same regulations as conventional financial institutions.
Latin America: Countries by crypto value received. Source: Chainalysis
Latin America’s Global Crypto Adoption
Despite regulatory challenges and varying preferences within the region, three Latin American countries secured positions in the top 20 ranks on Chainalysis’ Global Crypto Adoption Index. Brazil stands in ninth position, Argentina follows at 15th, and Mexico at 16th. The top position on the index was claimed by India, with Nigeria and Vietnam securing the second and third positions, respectively.