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Every day, attention-grabbing reports are being published in the cryptocurrency markets. According to a recent report by blockchain data analysis firm Chainalysis, an activity in Latin American countries has surprised the crypto community. The report reveals that investors in these countries are opting for centralized exchanges (CEX) instead of decentralized exchanges (DEX), unlike many other countries.
Interesting Data from Latin America
A report shared by a popular analysis platform on October 11th reveals that Latin America has the seventh largest crypto economy in the world, following the Middle East and North America, East Asia, and Eastern Europe. It is also disclosed that Latin American investors prefer to use CEXs:
“Latin America is the region that most prefers centralized exchanges among the regions we have examined and is somewhat distant from corporate activities compared to other regions.”
In some countries in the region, the distribution of crypto activities based on the type of crypto exchange platform is significantly inclined towards CEXs compared to the global average. The report states that while the global average preference for crypto platforms is 48.1% for CEXs, 44% for DEXs, and 5.9% for other decentralized finance (DeFi) platform activities.
Argentina Leads in Trading Volume
However, in Venezuela, one of the Latin American countries, the preference rate of investors towards CEXs is 92.5% and the preference rate for DEXs is only 5.6%, drawing attention. Chainalysis analysts attribute this situation to a “state of emergency” in the country. The report highlights that the crypto sector played a significant role in directly assisting healthcare workers during the COVID-19 pandemic in 2020.
During the days of the pandemic, the refusal of the country’s government to accept international aid for political reasons and the difficulty of traditional payment methods due to hyperinflation in the country led citizens to turn to the crypto sector.
In another Latin American country, Colombia, CEXs are adopted by 74% of the population, while the preference for DEXs is only 21.1%. Along with all this, Argentina had the largest trading volume among Latin American countries with an estimated $85.4 billion during the 12-month period ending on July 1st.
On May 5th, the Central Bank of Argentina issued a decision to ban payment providers from offering crypto services in order to reduce the share of crypto assets in the country’s payment systems. According to officials, the fact that traditional financial institutions and fintech companies in Argentina are subject to the same regulations played a significant role in this decision.
