In the case of fintech and cryptocurrency organizations, effective oversight from an independent source is essential. As a part of this process, 'internally' auditing these companies is an integral part of the process, since their reliance on technology poses a variety of specific risks that need to be identified and managed in order to meet regulations and maintain stakeholder trust. Moreover, these enterprises must implement robust audit procedures.

Keeping digital resources and information secure is an integral part of internal auditing in the financial technology and cryptocurrency industries. Since security breaches are a major concern in these fields, internal auditors need to be aware of the latest risks and ways to prevent them. It is essential that fintech and cryptocurrency auditors stay up to date with the shifting regulatory environment and industry standards. They must guarantee that all relevant laws and directives are adhered to by the company, as well as implementing measures to reduce risk and avoid scams.

The IIA's role in supporting cryptocurrency regulations and legislative proposals

As a global authority on internal auditing, the Institute of Internal Auditors (IIA) stepped up to meet its responsibility in bringing assurance to cryptocurrency regulations. They made sure that the internal audit teams are prepared to manage risk factors and comply with relevant rules.

In a legislative proposal presented by Anthony Pugliese, CEO of IIA, Congress hopes to improve corporate governance and increase investor security when using cryptocurrency exchanges. The IIA is a prestigious organization in its field, offering certifications and research to internal audit professionals across multiple countries. In conjunction with the initiative, an open letter was sent to the Chairs and Ranking Members of four committees: the Banking, Housing, and Urban Affairs; Agriculture, Nutrition, and Forestry; Financial Services, as well as the House Agriculture Committee.

The Importance of an Internal Auditing Function

The importance of internal auditing has been highlighted by the fact that having one in place can help ensure effective corporate governance and internal control. Additionally, having it in place can increase the trustworthiness and value of an organization with stakeholders and customers.

The IIA's Proposal for a Private Internal Audit System

In response to the demise of FTX and subsequent conversations between congressional personnel and third-party interests, the IIA introduced an initiative. This proposal is comprised of four crucial components: instituting a definition for a "Certified Internal Auditor," formulating a definition of an "internal audit function," necessitating that all crypto exchanges in America and any related legal entities have a private internal audit system, and imprinting an Annual Internal Control and Evaluation Report, in which executives at crypto exchanges must validate that their controls are appropriate and effective.

Proposals to Strengthen US-Based Cryptocurrency Exchanges and the Importance of Internal Audit System

It has been proposed that legislation strengthen US-based cryptocurrency exchanges to restore consumer trust in digital assets and foster greater transparency and accountability and to improve investor protections. There were four recommendations Pugliese made to Congress regarding future regulatory policies. His message was clear: to regain public trust in cryptocurrency markets, it is crucial to establish a strong internal audit system. He included specific legislative language as well as explanations of why it was necessary. This move recognizes the importance of adhering to best practices to boost business credibility while safeguarding stakeholders' interests - by defining 'Certified Internal Auditor' and 'internal audit function,' requiring legal affiliates to possess an independent internal audit function, and requiring an annual 'Internal Control and Evaluation Report.'