AMA With Max Property Group’s Head of Development
Erwin Van Kekem conducted an Ask Me Anything (AMA) session, hosted by Dutch Crypto Chat, in cooperation with LekkerCryptisch
NOTE: Answers have been slightly amended/corrected from the original to make the answers more correct and/or complete. Originally posted on Dutch Crypto Chat, edited by Max Property Group
Q: Welcome @erwinvankekem! Tell me who you are and what you do at MPG! And explain the problem which MPG tackles!
A: My name is Erwin van Kekem. I have been working in IT for over 25 years and since September last year I have been closely involved with Dominium. From January 1 this year in the role of CTO of Max Property Group, among others responsible for the development of the Max Crowdfund platform.
Q: @erwinvankekem Is the low volume on the Exchanges not a problem for you at the moment?
A: No. We do not believe in wash trades and fake trades. The volumes you see for MPG are real and we would like this so stay like this. Obviously a higher volume and rate would indeed be good for our users.
Q: @erwinvankekem When do you determine that your project has become successful?
A: If I understand your question correctly: Once we are fully licensed by the AFM and are placing third parties investments and our secondary market for security tokens is live.
Q: In the real estate world, it is a well-known phenomenon that the one with the largest wallet determines the market, as it actually happens everywhere. How do you ensure that everyone gets a chance with your investment and not all the “big boys”?
A: For now we will ensure that the projects are filled on a first come first served basis. In the future we can set limits on how much one person can invest to ensure a large wallet is irrelevant.
Q: MPG has a lot of experience in real estate (funds) and will now use blockchain (smart). You are very new to the blockchain world compared to many projects. Where did you get the expertise to be able to develop quickly enough? Do you think the blockchain knowledge (at Ardor I understood) is enough to make this real estate plan flourish or is this still a test run for example?
A: Support for Jelurida on the one hand and supplemented by external consultants on the other. Ardor offers a powerful, out-of-the-box solution that makes the platform possible through API integration.
Q: Why did you actually opt for the not entirely known Ardor chain? Can you describe that?
A: See previous answer. Precisely because of powerful functionality such as account control and phased transactions makes compliant development out of the box relatively easy.
Q: @erwinvankekem what was your biggest mistake developing this project? How are you going to make up for it?
A: Timing of the ITO was extremely unfortunate afterwards, as the market was terrible on the 15th of August 2018. We have since moved to a more traditional method of fundraising through equity, but we still have more phases of the ITO available too.
Q: @erwinvankekem are or are debts sold by MPG freely tradable on a secondary market? — If not; why is blockchain technology needed?
A: Eventually this will be possible, but regulatory restrictions in local markets apply. In NL, for example, it is not allowed without the correct license. Ultimately, we want to obtain the required license and open Max Crowdfund for trading. Until then, we will unfortunately have to limit trading.
Q: Why higher price that you have to pay if you buy mpg on platform instead of exchanges? $ 0.012 on exchanges vs € 0.25 on platform according to wp. That is an extreme difference.
A: We could of course offer MPG tokens at market rates via the platform. However, we have promised the market that we will not do that and we stick to our agreements.
Q: @Gudo_MPG Maybe a question for Edwin and the question is still a bit sensitive but ask m: blush :: After an ITO where unfortunately too little money was raised to implement the plans that MPG had in mind, MPG was forced to do more Bring $ MPG into circulation then provided (in proportion to $ MPG sold). This puts enormous pressure on the value. How does MPG intend to regain the damaged confidence of investors?
A: The Airdrop & Bounty Program & Referral tokens would always be used for marketing purposes, but we have determined that this has a negative impact on the value and volumes on exchanges. We are considering completely stopping bringing more MPG tokens into circulation and considering a burn program. Details are discussed with the board in 2 weeks.
Q: @erwinvankekem what about the investors? a target price for the token?
A: The price is determined by the market. Our goal is obvious that the price must rise. If we go live with initial applications and receive (much) more transactions and therefore start burning tokens, the demand increases and so is the rate.
Q: @erwinvankekem what exactly is the function of MPG now?
A: The function of the MPG token is to register transactions on the MPG blockchain, which is done through the Max Crowdfund platform. Therefore it is a utility token. Compare it with a prepaid tel, you cannot make calls without credits. On Max Crowdfund you cannot make transactions without MPG tokens.
Q: I saw an update on telegram that spoke about improving safety. What did this update consist of, was there a major security bug?
A: It was possibly to do with a bypass of Cloudflare security. This route has now been cut of. Additional measures have also been implemented through brute force and DDOS attacks.
Q: @erwinvankekem With the MPG token you can buy security assets (real estate) can you also trade these security assets against other assets? Or am I wrong.
A: You (currently) cannot invest in Assets using the MPG token. It is possible that this will be an option in the future, but this will always depend on the person behind the Asset. If they are willing to accept MPG they can select that option. It is possible to trade Assets for Assets, but we will not allow this in the beginning.
Q: I see that the MPG token is used for different things but if I understand correctly there is no option to invest 100% with for example the MPG coin or btc? Why not? @erwinvankekem
A: At this stage this is not permitted by regulations. We could accept BTC and convert it immediately to Euros or GBP via Bitstamp, but you can do this yourself too. The problem to overcome from a regulatory perspective is proof of funds.
Q: @erwinvankekem How big is your lawyer team? I assume this must be a strong team with a lot of experience. Is this well covered for you?
A: We now use multiple advisory parties with even larger support that can be called in when needed.
Q: @erwinvankekem What I wonder are you actually buying the real estate with crypto as a payment method or does it have to be converted into cash?
A: We only buy real estate with fiat currencies, as the Financial Authorities (AFM) does not allow the use of crypto currencies, or at least not when the origin of money cannot be determined unambiguously.
Q: Bank account verification seems pretty easy to me, I see that you also have crypto account verification. Why ? How ? And what about staying anonymous? @erwinvankekem
A: The simple answer here is the fact that you always need to identify the person who is investing in a financial instrument. As such you have to pass KYC. If you want to stay anonymous you will have to trade in tokens only.
Q: @erwinvankekem Which bank are you at? Isn’t it a problem that you are a crypto company? How did you approach this? I know this can be a problem
A: We are first and foremost a real estate company. The future ESCROW foundation is banking with Bunq. MPG itself and the funds have accounts with various banks.
Q: @erwinvankekem Why will MPG tokens not fall under the supervision of the AFM? Is this not seen as security?
A: Because MPG is a utility token, it is not supervised. That is different if you are going to issue STOs. All the Assets on our blockchain will be security tokens and as such will have to fall within the established guidelines for securities.
Q: @erwinvankekem Does Jelurida blockchain provide experts for you or are all experts who develop hired external consultants who use Jelurida for you? How can you convince me that you can develop fast enough as needed in the blockchain world?
A: Jelurida is developing the blockchain as a service platform that we use. We have a dedicated point of contact for support. The MPG blockchain is therefore maintained by Jelurida and they are known and proven blockchain developers.
Q: @erwinvankekem As you have already acknowledged yourself (your MPG channel) you are entering into a partnership with “AgentMile”. Strong together and I think we all welcome that. Can you tell more about the collaboration with “AgentMile”. In which area of your business do you work together?
A: AgentMile is going to promote MPG to their members, as these are “property” affine. MPG examines which other synergies there are, but for the moment that is all.
Q: @erwinvankekem suppose I want to raise money via MPG for a real estate project by issuing debt securities (?). Do I have to have a business form + prospectus?
A: Yes, it will only be possible for companies to raise money. Depending on how much you want to collect, an exemption from AFM prospectus approval is possible, but an Information Document is always required. There are various exemption rules for fundraising without a prospectus.
Q: @erwinvankekem When I buy security assets with MPG tokens. Can I also download all forms here? And if I then sell these assets to someone else, for example. Do I have to add the forms?
A: You cannot buy Assets with MPG tokens. They are only to pay for the transaction fees on the Max Crowdfund platform. If you want to invest in a security token, you can download all relevant documentation if you wish. You could sell these to someone else once we open up the secondary market, but for this we require an AFM license.
Q: @erwinvankekem, is a rise in the rate a goal in itself?
A: Yes and especially for our users. The aim is to go to EUR 0.25 so that we can resume sales via the platform.
Q: @erwinvankekem are you aware that such statements about price movements (including a promise of profit) are not allowed?
A: I only express the hope that the rate will rise, we do not make forward looking statements and do not give any financial advice to anyone. We have in any case committed not to sell below EUR 0.25. We have no influence on this, it is up to the market.
Q: @erwinvankekem Do you see yourself more as a blockchain company or as an investment company?
A: We are a real estate company / investment platform on the blockchain. We rent out and manage a lot of real estate within the group and though our various funds. By optimizing these activities, we will soon be able to reach a large audience at low costs. In due time real estate brokers and the associated costs could become unnecessary.
Q: @erwinvankekem If I invest on the platform and I buy in a particle from a certain property, what does that mean for my tax return?
A: Your income in the Netherlands will fall within the capital gains tax (box 3). This may of course be different in other jurisdictions.
Q: @erwinvankekem, are you striving to become part of an eco-system? Nxchange also has a vision about real estate, do you know it and if so do you share that vision?
A: Yes, that is, we work together in a working group with FIBREE and various small and large parties in the market to arrive at standards for real estate on blockchain. Of course these must then also be implemented on our platform.
Q: @erwinvankekem How is the value of the Security assets calculated? And how does it get its value? Is this fixed to the company? Or is this purely supply and demand?
A: Bonds are issued, these are € 1,000 per bond and with this a real estate portfolio is purchased. Every 3 years a valuation is done on the entire portfolio and that reflects the value. (with MPG 1, profit sharing is 50% after 10-year term, with MPD and MPGUK it is 30%).
Q: @erwinvankekem are the transaction fees paid in MPG a service fee for MPG or are they only used to pay gas fees on the ardor chain?
A: MPG transaction costs are a service fee for the MPG blockchain.
Q: @erwinvankekem When I look at the real estate prices, it looks like the market is going well. What is your plan if the market collapses? We all know the stories of realtors who had to close their doors during the previous crisis.
A: Our philosophy is buy, renovate and rent out. Even if the market price falls, rental income remains stable (increases with indexing). Worst case, in consultation with investors, the term of a fund could be extended to wait for a more favourable moment for sale (and profit sharing!).
Q: @erwinvankekem, do you have to state the value of the tokens to the tax authorities? And if so do you generate a ready-made printout? And is this coordinated with the inspector?
A: This is everyone’s own responsibility / Formally, you must include the value in your tax return on 1 January
Q: @erwinvankekem Do you have experience building a crypto community? What do you encounter?
A: In the meantime we have gained a lot of experience in building our crypto community and we have learned that they are a fickle bunch. We, as real estate people, believe in long term gains and the crypto community is expecting quicker returns. What our goal (and challenge) is, is to build a “bridge” between the crypto community and the traditional (real estate) investor.
Q: @erwinvankekem has your project been feasible without a blockchain?
A: Basically yes. There are enough “traditional” platforms. However, this does not achieve the transparency in the real estate market that we are aiming for.
Q: @erwinvankekem Can we expect new ones in addition to the current use cases?
A: Yes, in principle everything about real estate can be brought to blockchain. Think of sales / rental processes, but also management, management, maintenance and so on. It is precisely then that the transparency that we aim for is achieved and this is what we achieve to build.
Q: @erwinvankekem, in terms of valuation, do you assume market value, book value or appraisal value?
A: Appraisal value; as stated in the information document periodically re-determined (MPG funds: 3 years each).
Q: @erwinvankekem if I participate in a real estate project. What exactly is in my possession? Do I have legally valid debt security in my hands?
A: That will be expressed clearly and transparently in due course. Yes, you have a legally valid loan, bond or share.
Q: @erwinvankekem do you expect that the benefits of transparency of the blockchain that you find so important (among other things to prevent fraudulent investors) will decrease by lowering the entry threshold to invest in real estate? If not why not? So many more transactions are added to check?
A: Every person who wants to invest in the funds must go through the KYC process (both with forms and on the platform), so the check is a one-off. Over the years we have received the feedback that many people want to invest in real estate funds. There were / are 2 large thresholds here. Joining a fund often starts at 10–25K and the duration is fixed 10 years. So by making this easily accessible (from 1k) and offering an exit strategy, our project is unique.
Q: @erwinvankekem Yes, that certainly makes you unique, but I read in an interview that you want to lower the threshold to 0.1K in the future. Hence the question because you then take on many small savers. Or is that information incorrect and the threshold remains 1K?
A: There is a limit to what the minimum can be in terms of efficiency. I also think that we should not seduce people with limited savings with a higher return. My personal estimate is that EUR 500 should be pretty much the minimum. At a later point in time this could perhaps fall even further and this depends on how much we can automate. That will prove in due course. In comparison with the current real estate world, a minimum of EUR 10 or even EUR 25K EUR more common
Q: @erwinvankekem is there a transfer tax on buying or selling?
A: Not for a loan, bond or share (security tokens). Transfer tax does apply to buying and selling real estate and this will be included in the costs of a project in which you invest / participate. Common rules apply.
Q: @Gudo_MPG Which media channels are / have been tapped to gain more recognition, and does MPG use marketing agencies for this?
A: We use the standard social channels and the BDM team to gain more recognition. We also do this through partnerships (eg NL crypto channels). We do not use marketing agencies for this as we do this inhouse. In the near future we will also focus more on E-Mail marketing.
Q: @erwinvankekem Investing always involves risks. How do you limit this as much as possible for the token holders? For example, do they have the first mortgage right?
A: This will be indicated per project. (First) mortgage law will indeed be the most used security for investors. Other forms of collateral may also apply additionally or instead. We logically strive for the lowest possible risk for investors.
Q: @erwinvankekem The wp states that if tokens become small, a share may be switched. This is of course very distant future, given the high supply. 2 questions: 1 In your wildest dreams by which year do you consider this to be possible 2 how could you realize this.
A: We have indeed reserved the option. I don’t see this happening yet.
Q: @erwinvankekem I see that you are asking online for support from the community to come up with Binance. But isn’t this just a matter of paying and you come to binance?
A: An exchange like Binance looks at more criteria than “pay money”, so they also look at the community, activity, etc. I would add that there are indeed exchanges where you can pay and you are listed.
Q: @erwinvankekem to be honest it remains a mystery to me what the added value of a token is. Capturing an offer on a block chain will be interesting, although I personally do not see the need for that, but that is fine without an own token. Could you explain why we (or they) need MPG?
A: The added value is having your own blockchain for real estate related transactions only. The MPG token is linked to having a child chain on Ardor. You need MPG tokens to write transactions to the blockchain.
Q: @erwinvankekem do you also do equity tokens or just debt? Debt is a right to debt payment. Can I really become a shareholder in the underlying real estate?
A: We currently have no equity token fund, we do not exclude this in the future. If there is an equity token for the real estate then you would be a shareholder.
Q: @erwinvankekem The legal conditions state that MPG also performs an investigation after receiving AML and KYC documentation. You can still be refused to register. What exactly does this investigation entail, what are the grounds for refusal.
A: People passing KYC on Max Crowdfund will also be checked against PEP and sanction lists and if you are on there it can be a reason for rejection. Attempted fraud by forging your ID document and / or proof of address and / or selfie idem. As a rule, you are simply accepted if you follow a process and have a bank account with an EU bank in your name.
Q: @erwinvankekem what is your plan with the MPG obtained from fees? Immediately re-entering the market ensures a very fast turnover rate which depresses the value. Do you have a plan for this?
A: MPG obtained from platform and bundler fees are burned periodically. The revenue model for the Max Crowdfund platform is in EUR fees that are partly provided by the investor and the borrower. All MPG transaction fees will be burned.
An update of the rate pages will follow shortly, which will hopefully help
Q: @erwinvankekem Which countries are on the restriction list?
A: These are the countries that have been placed on international sanction lists. Think North Korea, Yemen etc.
Q: @erwinvankekem I think it’s a pretty untenable situation if your platform and users depend on a specific course of your token? You are talking about resuming the sale if the token is 0.25?
A: This is exactly why we have established all the fees on the platform in Euros. This way there is no dependence on the rate of the MPG token. If people want to buy the MPG token directly on the platform, it will cost € 0.25. Many real estate investors will take this option and not go on an exchange to buy them there, as they will not know how it works. The tokens obtained from the transactions are burned.
Q: @erwinvankekem It seems that you want to offer something that does not fit within the framework of the law and therefore seek refuge in the unregulated world of the blockchain. It remains a mystery to me that an MPG token would be needed. To put that into a question — why not integrate an existing chain to achieve your goal?
A: It is actually the other way around. Most existing solutions are at odds with how legislation and regulations deal with this. Free, anonymous trading to name a few is a thorn in the eyes of regulators. Anonymity and the inability to trace the origin of funds is another. To be compliant with legislation and regulations, we do things differently from existing platforms. Ardor connects better than many of the existing solutions, because they have built in functionalities that we require, where other solution would require a lot of customization.
Q: What is the interest of other real estate companies? It is nevertheless true that the system can also be used by third parties?
A: There is certainly interest. Many real estate initiatives are struggling with financing. Unfortunately, we cannot help them until we have the required licence from the AFM.
Q: @erwinvankekem One of the major challenges for projects based on / built on the blockchain is how to make this available to common people, and perhaps to the masses in such a way that they do not have to realize that the project is built on blockchain? This is possible, for example, through apps in which you can purchase MPG products. Are such apps part of the roadmap? If not, perhaps something to consider?
A: We are fully aware that the gap between the “normal” world and the “crypto” world is big and the platform would work best if people do not realise they are using blockchain technology. This is exactly how we are building the platform. An app is definitely on the roadmap, as are many other interesting functionalities. Thanks for the tip either way!