'Trust in Authority' Sustains Popularity of Centralized Exchanges in Latin America, Says Ricardo Da Ros

Latin American Crypto Users Not Well Versed with Decentralized Exchanges

Furthermore, he notes that limited knowledge about handling self-custody wallets means many LATAM crypto users would rather use CEXs. However, Da Ros told Bitcoin.com News that decentralized exchanges ( DEXs) could help reduce users’ ignorance by educating them on how to take ownership of their funds.

Meanwhile, when asked to compare the general knowledge of LATAM users with those from North America or Western Europe, the Patex CEO observed that the awareness levels of Latin American users stem more from a need to find alternatives to the local financial system.” He also noted that institutional activity in the region is still limited, with the few involved corporations primarily interested in using the technology to move funds quickly and efficiently.

In his written responses, Da Ros also shared his thoughts on the potential of Central Bank Digital Currencies ( CBDCs) to boost LATAM economies. His answers to all the questions are provided below.

Bitcoin.com News (BCN): According to a report by Chainalysis, users in Latin America appear to prefer centralized cryptocurrency exchanges. Can you discuss why Latin Americans are adopting cryptocurrency and their preference for centralized exchanges ( CEXs) over decentralized ones, despite the latter offering them full control over their finances?

Ricardo Da Ros (RDR): The culture in Latin America has been built on trust in authority. Due to the complexity and risk of managing their own assets, crypto users in Latin America favor CEXs to have their assets in a safe place, in the same way, they are used to handling other assets in their lives. Having an entity that can provide support and more professional security management provides peace of mind to users. The level of knowledge on dealing with wallets and transactions on their own is very low, demanding more education to bring the average user up to a level where they can be confident in managing their own crypto assets.

We believe strongly in educating users to take ownership of their crypto assets. Patex will also offer a DEX option to our users, but everything needs to happen in the appropriate time to bring the most benefit to people. We are still in the early stages of crypto, so our focus on education will collaborate with the growth in the knowledge level of users to achieve the goal of having the crypto market become one with the traditional market. At that point, managing crypto assets in a self-custodial way will be much easier through better technology and better user experience.

BCN: What does the institutional crypto activity look like in Latin America and how do you see this evolving in the next few years?

RDR: The institutional crypto activity is not as developed in Latin America yet. There are a few sectors that are more engaged, but primarily for moving money in a faster and cheaper way – not for institutional investment. This will change rapidly as regulation evolves and the crypto market consolidates through the next market cycle. I believe Latin America will be a hotspot for crypto, including institutional investors, within the next three years.

BCN: Your platform Patex has been focused on regulatory-aligned blockchain products and services tailored for the LATAM market. Could you tell our readers what these solutions are and how, if at all, they enhance the accessibility and utility of Web3 for end-users?

RDR: Patex is an ecosystem with many products and services. We have a CEX with performance and features comparable to the best in the world, as well as an educational platform and a layer 2 blockchain. The philosophy behind the ecosystem is to provide everything a crypto user needs in one place, from the beginner to the expert.

In our Patex Campus we provide free education in Portuguese, Spanish and English, to enable the new users to acquire the basic knowledge they need to start their crypto journey. Our layer 2 blockchain provides access to innovation in web3, with projects available for every user. We are also working on the Patex Digital Bank, which will be launched soon. The digital bank will integrate all functionalities that a regular bank offers to the crypto ecosystem, making the lives of our users even better. All of those initiatives are fully compliant with the local regulations, which will allow us to offer CBDCs in our ecosystem as soon as they are launched by LatAm countries.

BCN: Could you provide insight into the regulatory landscape for cryptocurrency in key Latin American markets such as Brazil, Argentina, and Venezuela? How challenging is it for builders in the Web3 space to meet users’ needs in a manner that complies with these regulations?

RDR: Each country in LATAM has its own regulatory landscape and we are constantly monitoring the developments. Brazil is well positioned in terms of regulation for the crypto market, with regulators in constant conversation with the key local players. There is some clarity already in Brazil and the landscape is favorable. In Argentina, the situation is a bit more fluid, as they had a recent change in the political context and crypto is still under discussion.

The people in Argentina are used to dollarizing their economy and have been using crypto as a way to protect themselves from hyperinflation. The crypto ecosystem in Argentina is very strong, but the companies all have a plan B in case the regulatory landscape changes. Venezuela is more challenging, due to the political situation. Although there is a lot of crypto activity in Venezuela, it has become a more difficult market to enter at this time.

There is a big distinction between crypto exchanges and web3 projects with regard to local regulations. Most web3 projects are global and decentralized, without any direct link to local fiat currencies. Due to that, they can be accessible and used by anyone, anywhere. On the other hand, CEXs and other crypto companies that handle fiat currencies need to be fully compliant with local regulations to be able to operate.

BCN: What difference do you see in the crypto awareness in Latin America compared to other regions like Europe?

RDR: The main difference is that crypto awareness in LATAM comes more from a need to find alternatives to the local financial system, either for protection from inflation or to find a way to generate extra income. In Europe and other parts of the world, the market is more mature and people adopt crypto as an investment class rather than a flight to safety.

BCN: Brazil is preparing to launch its own central bank digital currency ( CBDC) called Drex (Digital Brazilian Real). Argentina and a few other Latin American economies have also been exploring CBDCs. Do you believe CBDCs can boost the LATAM economies?

RDR: My view is that CBDCs will not change the LATAM economies significantly. It is just a more technological version of the same fiat currency in existence, so the main difference is the level of control the State will have over the monetary system. It will make transactions more efficient and faster, for sure. But take Brazil as an example – there is already a government-backed instant digital payment system called PIX, which is used by over 150 million people and generates around 3x of the transactions of credit cards.

The population will not see a big difference between PIX and DREX. The main benefit of CBDCs for LATAM countries could be that countries would be able to hold each other’s currencies more easily, facilitating trade. I don’t think there will be a positive impact on the economies when the CBDCs are launched, at best things will be the same.

What is your opinion on this interview? Please share your thoughts in the comments section below.