The Institute of Internal Auditors (IIA) sent an open letter to Congress on Thursday, May 4th, in an effort to promote corporate governance, transparency and accountability within the cryptocurrency exchanges operating in the United States. In their letter, the IIA proposed four legislative plans.

The first proposal defined the need for an internal audit function, to be composed of professional and independent individuals or groups who would have oversight of the covered entity and supply it with objective assurance, consultative services and strategic advice on mitigating risk. The second proposal recommended the establishment of an internal audit function for all US crypto exchanges. This internal auditor would report to the board of directors twice a year informing them of any material risks.

The third and fourth proposals were about the duty of the crypto exchanges’ management staff towards the regulatory authorities, requiring them to submit an audit report which included an evaluation of the efficiency of the internal controls that are in place within 90 days prior to submitting the report.

The IIA also engaged in dialogues with congressional staff and external stakeholders in an attempt to identify potential policy solutions regarding investor protection and corporate governance safeguards.

IIA President Anthony Pugliese reiterated the need for transparency and accountability and the positive effect it will have on investor confidence. He wrote in the letter that “inclusion of new internal audit requirements will, in part, promote transparency and accountability designed to restore investor confidence in the cryptocurrency market.”

The IIA’s letter to Congress is an important step towards achieving accountability in the cryptocurrency market in the United States, and creating a system of trust and legitimacy amongst potentially skeptical investors. The proposed framework of internal audits will help in regulating the burgeoning sector and creating greater security for the participants in the market. Moreover, the IIA also aims to be of help in communicating the risks associated with cryptocurrencies and their implications for the investors.



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