I'm sorry. I apologize.
First would be financial inclusion. There are close to eight million Canadians whom the banking industry considers to be non-prime, meaning they cannot access credit via the larger institutions. Our members provide ways for the unbanked to save, access credit, and also send their money via remittances cheaply, securely and quickly. This is an excellent opportunity to export Canadian technology to the billions of underbanked across the world.
Second would be pharmaceutical provenance. It's estimated that four billion incorrectly labelled or fake drugs are administered each year, putting Canadian lives at risk because they are receiving wrong medication or improper doses due to lack of provenance with overseas manufacturers. By utilizing an immutable blockchain, pharmacies can verify the authenticity of the pharmaceuticals they administer and even get real-time alerts directly from manufacturers for when medications expire or become available. Given the recent children's ibuprofen shortage, as a single mother this could have a direct impact on my life personally.
Third would be food security. By allowing for public transparent records in the agriculture industry, we can have the entire value chain of livestock or produce on a tamper-proof blockchain. This improves the provenance of the livestock and produce going to market. This can cut food recall times down from days to seconds and improve supply chain efficiency. You can quickly verify what product was contaminated and where it was delivered, and quickly remove the items from stores, saving companies millions in food recalls and improving Canadian food security.
In order to realize the potential more broadly, our members believe we must collaborate with regulators and government to address key issues that virtual asset service providers, or VASPs, and blockchain technology companies have.
I would like to highlight four pressing issues around this.
First is fair and transparent regulation of crypto-assets. Canada needs to clearly delineate which digital assets qualify as securities, derivatives, commodities, data and currencies. We believe that the development of a digital asset taxonomy is critical to providing much-needed clarity for platforms and investors to determine which legislation applies. Despite this, many of our members are already collaborating with regulators to better define consumer protection standards, similar to that of current financial risk frameworks.
Second is improvement for combatting financial crime and terrorist financing. Many of our members regularly collaborate with law enforcement to identify and respond to criminal activity. Some of our members have helped to train law enforcement with respect to blockchain forensics tools, and I'm proud to say that a unit in Calgary is quickly becoming a global leader because of our members. While all VASPs are now required to be registered with FINTRAC and comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which also covers virtual currencies, such rules are not yet harmonized across jurisdictions. This presents a challenge to VASPs that have a Canadian and international presence. We encourage the government to work with other countries to harmonize these regulations.
Third is investor protection against fraud and illegal securities. Many of our members regularly collaborate with law enforcement and Canadian securities regulators to identify fraud and provide better risk disclosures to users. Given the pace at which the technology evolves and that bad actors exploit it, admittedly there is more to do. We believe we should improve our consumer disclosures, both for VASPs and in traditional finance, so that they are easier to understand and Canadians can make informed decisions, instead of critical disclosures being buried in terms and conditions.
Fourth is strong standards for cybersecurity, crypto-custody, insurance and proof of solvency. Crypto-asset exchanges and custodians with poor storage policies are a major vector for cyber-attacks, misappropriation of funds, theft or fraud. This was very apparent with the recent FTX bankruptcy filing. Standardizing requirements and enabling adequate insurance coverage for cybersecurity and crypto-asset custody would be beneficial. Many exchanges are exploring a proof of reserves attestation model, such as Binance, which leverages cryptographic proofs and on-chain verification.
Finally is a word about the crypto-mining industry.
Many people criticize Bitcoin for having such a large energy footprint. However, because Bitcoin mining can happen anywhere, miners will find the lowest-cost power possible. A large portion of mining is currently run on hydro power that would otherwise go unused. Bitcoin mining also supports the development of new renewable energy projects, as miners can act as a buyer of last resort on variable power production like wind and solar. Because mining equipment can be shut off quickly without damage, Bitcoin mining operations can also sell their power back to the grid at peak times, making the grid more flexible and robust.
Thank you, Mr. Chair, for the opportunity to speak today. I look forward to your questions.