5 questions with crypto legal expert Dara Tarkowski

Broward native Dara Tarkowski is a leading legal expert in the Web3 space. As Managing Partner of Actuate Law, Tarkowski represents creditors in a range of litigation and regulatory matters, with a particular focus on complex litigation and consumer finance law. Alongside her colleagues Randy Rivera and Loly Sosa, Tarkowski has developed Quointec, a digital platform for legal compliance. While Actuate was founded in Chicago, Tarkowski and team have now set up shop in Wynwood to expand their practice in South Florida.

This interview has been edited for length and clarity.

What Web3 projects most interest you these days?

Web3 is about taking the power away from the entities that currently govern our identities on the internet, and putting them back into the hands of users. Right now, people – and especially regulators – are focused on privacy and security. The world is sick of reading about data breaches. We’ve proven time and time again that private organizations are terrible at keeping our data safe. So there has got to be a better way to protect people’s information and give people back the power over their own information. Those are the types of projects that I find really, really exciting.

Also, I think what’s happening in Miami with MiamiCoin is incredibly interesting. The idea of using the blockchain and crypto as a new way to fund our municipal infrastructures is cool and creative. I love assisting organizations in figuring out how to break with the old, make it better, and do it in a compliant and safe way.

What does the Web3 regulatory landscape look like? 

The regulatory environment for blockchain and crypto is still trying to catch up with the technology itself. When we talk about tokens, for example, we start running up against a lot of different regulators and regulatory environments. The problem is that there isn’t one set of laws surrounding crypto. How the token functions, what it does, and what it represents will dictate which regulator is going to care about it – the SEC, the CFTC, and the IRS, just to name a few. 

There are a lot of important questions that have no clear answers yet. I think that we are going to see a lot of retroactive application of case law, where typical rules and regulations are applied to the facts of the specific issue that we’re talking about.

How do you feel about the government’s ability to create legislation around cryptocurrency? Broadly optimistic, pessimistic?

I would say that I am a realist/pessimist. I think that at the federal level, getting any sort of comprehensive regulation or legislation passed in the current political environment in Washington DC, is going to be difficult, if not impossible. Presently, the administration is very conservative. There’s nothing wrong with that, but it means that they are going to approach particularly new and confusing products like these with a great, great deal of caution. And there are going to have to be years of studies conducted before they will feel comfortable issuing rules or regulations on it. It’s unfortunate, but I do think that’s the reality that we’re operating in, at least at the consumer level.

There are some lawmakers out there who get it. They understand how crypto works and are bullish about the opportunities. But there are more lawmakers that don’t get it. Frankly, I see more opportunity for good regulation at the state level than I do at the federal level. At the state level, I’ve spoken with senior legislators who see the struggle for businesses who say: “‘I want to follow the rules, but you have to tell me what the rules are. Until then, I can’t follow them.”

What are your thoughts on the rapidly-growing South Florida tech ecosystem?

I’ve been working with a large Miami-based client that has been making technology investments for many, many years. Recently, we’ve noticed that more and more of their deal flow is coming from South Florida and Tampa. That was my first indication. Then, we started hearing from our clients in the Midwest that they are seeing opportunities in Miami and Florida more broadly. 

Florida has always been a very business-friendly state. It’s built that way from a tax and governance perspective. But recently, we’ve seen a lot less brain drain than there has historically been. That’s because of the opportunities for excellent professionals to stay and thrive in Miami, whereas 25 or 30 years ago there was less opportunity.

I think Covid really only accelerated everyone’s desire to be outside in the sunshine. Hats off to Mayor Francis Suarez for doing a phenomenal job of reminding the rest of the country and, in many respects, the world what a great place Miami is to do business. That has been impactful. People have paid attention and listened. And the FOMO effect has worked: as people see successful professionals moving to Miami, they want to move as well.

What legal pitfalls should crypto investors be aware of?

For everyday crypto investors (not institutional investors), I’d encourage them to be aware of the rules and regulations surrounding the exchanges they’re using. Make sure they understand the costs involved, because not every exchange is created equal. I know it’s as easy and fun to buy and trade crypto as it is to play Candy Crush, but I urge investors to talk to their accountants about what that’s going to look like at year end when they have to file taxes. They want to avoid owing a chunk of money to the government when they didn’t otherwise understand that they would. Finally, if you are active in the crypto space, my advice would be to find a tax professional that understands how crypto works.

Quointec is a digital platform for legal compliance developed by Randy Rivera, Loly Sosa and Dara Tarkowski.

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