Shinhan Bank would stop providing access to customers looking for fractional art ownership via a mobile application due to opposition by South Korea’s regulatory Financial Supervisory Service.
The regulator categorized the new type of investment service as investment contract securities, making Shinhan an investment broker, not just a service provider.
Shinhan Bank had notified customers that it will terminate its partnership with Seoul Auction Blue, which sells contemporary paintings, art toys, and luxury goods online, from July 30.
Since January, Shinhan Bank has offered online access to co-investing in art by embedding Seoul Auction Blue’s platform SOTWO into its mobile application.
The service has the potential to yield relatively high returns with only a small sum of investment, starting at 1,000 won.
Products on SOTWO have returned an average of over 10 percent. Tax exemptions for buying art by living artists were another merit.
Under the Capital Markets Act, an investment broker takes on heavy responsibilities and duties to protect consumers.
Woori Bank and Hana Financial Group had sought to forge a partnership with Seoul Auction Blue, but their plans went awry on Shinan’s breakup with SOTWO.