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The Art Fractional Investment Market Cools Down… TESSA Parts Ways with Kiwoom Securities

[비즈한국] The art fractional investment platform TESSA and Kiwoom Securities039490 are discontinuing their real-name account partnership. Kiwoom Securities had been providing account-linking services to TESSA since August 2023, but the partnership is ending before completing three years. Since both parties had joined hands just as art fractional investment entered the regulated financial sector, the backdrop of this termination is drawing attention.

TESSA recently announced that it would end its account-linking service with Kiwoom Securities. Starting at 9:30 AM on January 8, new account openings and linking functions for TESSA-dedicated Kiwoom Securities accounts will be suspended, and from 3:00 PM on the 9th, all functions within the TESSA service linked to Kiwoom Securities accounts will be deactivated. After the service ends, any remaining deposits not withdrawn from TESSA accounts will be automatically transferred to the users' main Kiwoom Securities accounts. Services such as art exhibitions, settlement of fractional investment proceeds, and new public offering subscriptions will be maintained through NH NongHyup Bank’s online fractional investment API service.

In its notice, TESSA stated, “We have decided to terminate the account-linking service with Kiwoom Securities to enhance service efficiency and provide a stable operating environment for both investors and the company.” Kiwoom Securities reported, “TESSA requested the termination of the account service.”

Kim Hyung-jun, CEO of TESSA, explained, “Previously, for public offering subscriptions, we provided both NongHyup Bank and Kiwoom Securities accounts as escrow accounts, but we determined it was costly and inefficient. The vast majority of investors use NongHyup accounts. We intend to centralize accounts with NongHyup Bank to increase management efficiency and reduce unnecessary costs.”

Kiwoom Securities and TESSA have maintained a collaborative relationship for over three years. Kiwoom Securities is also a strategic investor (SI) in TESSA. The two companies joined forces in July 2022 by signing a 'Comprehensive Memorandum of Understanding (MOU) for Mutual Cooperation in the Fractional Investment Business.' TESSA integrated Kiwoom Securities' real-name accounts starting in August 2023, shortly after TESSA was classified by financial authorities as an 'investment contract security' (a right to receive profit or loss from investing in a joint project with others) and resumed business following an exemption from sanctions.

The parting of the two sides is not unrelated to the deteriorating conditions in the art fractional investment market. TESSA is one of the early entrants in the domestic fractional investment market. Established in March 2019, it gained attention by conducting public offerings for works by renowned masters at home and abroad, such as David Hockney, Yayoi Kusama, and Lee Ufan. However, TESSA has not issued a single investment contract security since receiving its exemption from sanctions. Because it did not issue or offer securities, it was difficult to actively collaborate with securities firms.

Fractional investment companies endured a period of hardship while transitioning into the regulated sector. In November 2022, the Securities and Futures Commission classified fractional investments based on underlying assets like art and Korean cattle (Hanwoo) as investment contract securities under the Capital Markets Act. Financial authorities only granted exemptions from sanctions to art and Hanwoo fractional investment firms in July 2023. Investment contract securities can be issued once a securities registration statement is filed.

As fractional investment entered the regulated sector, it became combined with 'token securities.' Token securities are digital securities issued by linking physical assets based on blockchain technology. They were highlighted as a new growth engine for the financial market because underlying assets that are difficult to invest in—such as real estate, copyrights, art, and livestock—could be issued as token securities, making them easier to invest in. Securities firms began actively partnering with fractional investment companies as token securities emerged. Kiwoom Securities is considered one of the firms that acted quickly to capture the token securities market.

Although they were able to continue business within the regulated framework, the market did not bloom easily. After the formal issuance of investment contract securities became possible, Yield Corp issued the first security for Yayoi Kusama’s ‘Pumpkin’ in December 2023, but interest quickly waned. Subsequently, several fractional investment firms issued investment contract securities based on art, but some offerings began to fail to meet subscription targets. The sluggish sentiment in the art trading market and the long time required to realize profits after asset sales were cited as reasons for the lack of popularity.

The delay in the legalization of Security Token Offerings (STO) is also a problem. In the case of investment contract securities, secondary trading between investors is not allowed. As liquidity and marketability fell, investment sentiment shrank. For this reason, the industry hopes for securities trading through STOs, but the amendments to the Electronic Securities Act and the Capital Markets Act, which include STO legalization, have struggled to pass through the National Assembly.

Amidst this trend, TESSA has shifted its business direction toward securities public offering management solutions and alternative investments as a whole. In January 2024, it launched the corporate alternative investment securitization IT solution 'IXO,' and in March 2025, it introduced 'NUMIT,' a service for investing in assets related to future industries.

CEO Kim Hyung-jun said, “We intend to expand our investment areas not only to art but also to renewable energy. Due to the nature of the assets, art offers liquidation value through sales, while solar power investments offer interim sales dividends. We aim to provide various products tailored to market conditions and investor needs. We are also considering new public offerings for art.” TESSA is currently in discussions with other securities firms for future alternative investment offerings. The official launch of the integrated alternative investment platform is expected in the second half of this year.

Kiwoom Securities has not abandoned the fractional investment business either. Currently, the music copyright investment platform Musicow is integrated into Kiwoom Securities' Mobile Trading System (MTS). A Kiwoom Securities official said, “We provide services that link accounts through MyData with Seoul Auction Blue and Funble, and we continue to maintain our partnership with the fractional investment firm Musicow.”