According to a recent report by blockchain analysis firm Chainalysis, Latin America has a clear inclination towards centralized exchanges compared to the rest of the world, as opposed to decentralized exchanges.
Posted October 11, Chainalysis fixed that Latin America has the seventh largest crypto economy in the world, far behind the Middle East and North America (MENA), East Asia and Eastern Europe.
However, he notes that cryptocurrency users in Latin America strongly favor the use of centralized exchanges:
Latin America shows the greatest preference for centralized exchanges of any region we study and moves slightly away from institutional activity compared to other regions.
Furthermore, in some countries in the region, crypto activity by platform type significantly exceeds the global average.
The global average of preferences regarding crypto platforms is 48.1% for centralized exchanges, 44% for decentralized exchanges, and 5.9% for other decentralized financial (DeFi) activities.
However, Venezuela shows a 92.5% preference for centralized exchanges, compared to a 5.6% preference for decentralized exchanges (DEX).
Furthermore, he pointed out that Venezuela has a unique reason for its increasing adoptionmainly attributed to a "complex humanitarian emergency."
Related: Cryptocurrency adoption is booming, but not in the US or Europe: Bitcoin Builders 2023
The report explains that amid the COVID-19 pandemic in 2020, cryptocurrencies played a critical role in directly helping healthcare professionals in the country.
Cryptocurrencies therefore 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 represent only 21.1% of their preferences.
Meanwhile, three Latin American countries secured positions in the top 20 on Chainalysis' Global Crypto Adoption Index. Brazil is ranked 9 position, followed by Argentina in 15th place and Mexico in 16th.
Globally, India ranks first, while Nigeria and Vietnam rank second and third, respectively.
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