Latin America has the seventh-largest crypto economy of all regions Chainalysis studies. it is not far behind MENA, Eastern Asia, and Eastern Europe. Its position compared to other regions has “held relatively steady over the last two years.”
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.”
While Latin America has a smaller crypto economy than most other regions, grassroots adoption is strong, Chainalysis reveals. The blockchain analysis firm reveals that the LatAm region has three countries “ranking in the top 20 of our Global Crypto Adoption Index: Brazil (ninth overall), Argentina (15), and Mexico (16). Cryptocurrency has become an important part of day-to-day life in many countries throughout the region, and in particular those facing currency devaluation. We’ll explore that dynamic in more detail later.”
There’s significant variation in crypto usage patterns “among countries in Latin America. Check out the heat map below, which compares a few of the region’s biggest crypto-using countries by preferred platform type.”
Chainalysis also mentioned that “nearly every country shown devotes a greater share of transaction volume to centralized exchanges than the global average. In Venezuela, a whopping 92.5% of crypto activity goes through these services.”
Mexico, however, is “the lone exception — its platform breakdown is more in line with global averages, with nearly half of all volume being processed through DEXes.” This is likely the reason why Mexico devotes a higher share of purchasing activity “to altcoins, as DEXes list a far greater number of assets than their centralized counterparts.”
Mexico is also an important country to watch “for its embrace of cryptocurrency-based remittances. Remittances represent an important area of finance that crypto advocates have long touted as one the technology can make faster and cheaper. Mexico is the world’s second-biggest receiver of remittances, with an estimated $61 billion flowing into the country from overseas per year, mostly from the United States. ”
Brazil is another unique market within Latin America. As noted in the update from Chainalsis, Brazil’s well-developed institutional crypto market, and the country’s “embrace of DeFi and other innovative crypto platform types, putting it more in line with wealthier regions that were earlier to adopt crypto, such as North America and Western Europe, more so than its regional neighbors.”
The report further noted that like Argentina, Venezuela has “seen more than its fair share of economic problems and suffered from severe currency devaluation.” However, Venezuela differs from Argentina in one key way: The country is “ruled by an authoritarian government.”
Under the Nicolás Maduro regime, Venezuelans “face significant human rights abuses and political repression, and see less opportunity due to government corruption, examples of which include embezzlement from the country’s state-owned oil company.”
Venezuela’s embrace of cryptocurrency, and its role “in aid programs … provide an important reminder of the potential this still-young technology has to foster freedom and improve quality of life in the places that most need both.”