According to a recent report from blockchain analysis company Chainalysis, Latin America shows a preference for centralized exchanges (CEX) over decentralized exchanges (DEX) compared to the rest of the world.
Released on October 11th, the report highlights that Latin America has the seventh-largest cryptocurrency economy globally, following regions like the Middle East and North Africa (MENA), East Asia, and North America.
However, Chainalysis notes that cryptocurrency users in Latin America strongly favor using CEX platforms. The report states that Latin America demonstrates the highest priority for centralized exchanges compared to any region they studied, leaning more towards regulatory activities than other areas.
Furthermore, in specific countries within the region, the preference for cryptocurrency platform types significantly skews towards CEX compared to the global average. Globally, the average preference for cryptocurrency platform types is 48.1% for CEX, 44% for DEX, and 5.9% for other decentralized finance (DeFi) activities.
In contrast, in Venezuela, the preference for CEX is much higher at 92.5%, while DEX has a significantly lower preference at 5.6%. Chainalysis emphasizes that Venezuela has a particular reason for this growing trend, primarily attributed to “high inflation.”
The report explains that during the COVID-19 pandemic in 2020, cryptocurrencies played a crucial role in directly supporting healthcare professionals in the country. Cryptocurrencies became essential as traditional payments faced difficulties due to the government’s refusal to accept international aid, influenced by political reasons.
On the other hand, Colombia demonstrates a 74% preference for CEX, while DEX only accounts for 21.1% of their preference.
Argentina, however, leads in cryptocurrency trading volume in Latin America, with an estimated $85.4 billion in the 12 months ending on July 1st.