IIA Wants Mandatory Internal Audits for US Crypto Exchanges

The Institute of Internal Auditors said it wants an independent internal audit function at all US crypto exchanges to restore investor confidence in the industry

article-image

chase4concept/Shutterstock modified by Blockworks

share

The Institute of Internal Auditors sent a letter to Congress Thursday recommending that all US crypto exchanges have an independent “internal audit function.”

Inside were four separate legislative proposals that will “promote stronger corporate governance, greater transparency and accountability, and enhanced investor protections at cryptocurrency exchanges operating in the United States,” according to the May 4 letter written by Anthony Pugliese, president and CEO of the IIA.

The second proposal defines an internal audit function as “a professional individual or group…responsible for providing the board of directors and management with…: objective assurance over the covered entity’s internal controls; consulting services; and strategic advice on risk mitigation.”

Additionally, the second proposal stipulates that the internal audit function will be independent from management.

The third proposal mandates the establishment of this internal audit function for all US crypto exchanges. The leader of the function will also be responsible for briefing a crypto exchange’s board on “material risks” no less than twice a year.

This IIA previously sent a letter to Congress in December following the collapse of FTX to begin a dialogue with lawmakers and “help shape their policy recommendations” amid the crypto winter. 

“The IIA conducted numerous meetings with congressional staff and external stakeholders to determine the appropriate role that internal audit could serve in potential policy solutions that Congress might consider regarding the lack of sufficient investor protections and corporate governance safeguards at cryptocurrency exchanges,” Pugliese wrote in the May 4 letter.

The final proposal that was attached to the IIA letter suggested that lawmakers create an annual auditing report that the management staff of crypto exchanges must fill out and send to whichever regulatory authorities Congress deems appropriate. Management would also have to have evaluated the effectiveness of the company’s internal controls 90 days prior to submitting the report. 

Pugliese closed out his message to lawmakers telling them that these guidelines could bolster investor confidence in a sector that’s been hammered by numerous shady actors.

“The IIA believes inclusion of new internal audit requirements will, in part, promote transparency and accountability designed to restore investor confidence in the cryptocurrency market,” he wrote.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

AERODROME TEMPLATE.png

Research

Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495M in value locked, doubling Uniswap's Base deployment.

article-image

Also, a look into how the highly-debated SAB 121 could end up shaking out for crypto custodians

article-image

Vance, an Ohio Republican, is largely seen as crypto-friendly

article-image

Plus, all the world is green as prices across the crypto space rally, with solana reaching a nearly two-week high

article-image

Investors add to crypto positions after “turnaround in sentiment due to lower-than-expected CPI,” CoinShares research head says

article-image

Plus, Ethereum is in the midst of a vibecession

article-image

Also, former Valkyrie CEO lands new leadership role at Canadian investment firm Cypherpunk Holdings