Will Private Transactions Diminish? End of a Free Art Market as Gallery and Auction Reporting System Starts in July

Mandatory Reporting for Six Art Service Sectors, Including Galleries and Auctions, Begins July 26
Government Cites "Transparency" While the Industry Watches for Changes in Disclosure and Appraisal Standards

For the first time, the government is introducing official documentation to the previously private art market. Starting from July 26, six sectors within the art services industry—including galleries, auctions, advisory, rental and sales, appraisal, and exhibitions—will become subject to mandatory reporting. The government cites market transparency and consumer protection as its goals. However, the primary questions raised within the market are different: To what extent must information be disclosed? Who will have access to this information?

Visitors admiring the 'Hwaido (Following the Way)' exhibition. Photo by Gallery Hyundai,

According to the art industry on March 16, the art services industry reporting system will be implemented from July 26 in accordance with the Art Promotion Act enacted in 2023. The six sectors subject to this are gallery operations, art auction operations, art advisory services, art rental and sales, art appraisal, and art exhibition operations. Previously, these art distribution-related businesses operated without any reporting requirements; going forward, they will be required to report to the relevant local government and receive a certificate of registration.

The government’s rationale for introducing this system is clear. The current art market makes it difficult to accurately assess the scale of transactions and the structure of distribution, and the systems for appraisal, distribution, and responsibility are not systematically organized. While artwork prices have increased and the market has grown, regulations have not kept pace. This is why the Ministry of Culture, Sports and Tourism has held industry meetings ahead of implementation to explain subordinate regulations and gather feedback.

This reporting system does not target only galleries and auction houses. It is part of a broader effort to also establish an integrated information provision system, standard appraisal and authenticity certificate formats, and consumer protection mechanisms. The government’s intention is to more clearly define who is participating in transactions and how they are substantiated. The direction—improving transaction trust and expanding the market foundation—is evident.

The challenge is that the art market does not operate like the market for industrial goods. Prices, transaction partners, and ownership information are often exchanged quietly. In particular, so-called private sales are a core practice in the market. When a reporting system is introduced to a market where deals are often closed through a single phone call, a brief introduction, or long-standing trust, it is not just administrative procedures that change—the very rules of engagement shift.

Jaemin Lee, professor of law at Changwon National University, said, "Currently, the art distribution system is not fully transparent, and there is no registration system for artworks; these realities must be considered." He added, "Because various types of secondary market transactions coexist—such as auctions, gallery brokering, and private deals—a phased approach is necessary rather than a one-size-fits-all solution."

The Galleries Association of Korea is not wholly opposed to the reporting system itself but is paying close attention to its design and detailed standards. Dongjae Baek, policy director of the Galleries Association of Korea, said, "Since the reporting system is already enshrined in law, the real issue is not its reversal but how it will actually function in practice. While the reporting requirements have been relaxed compared to initial concerns, the crux lies in what standards are set in subordinate regulations and official notices." He continued, "The industry is especially sensitive about the extent to which private transaction information will fall under administrative scrutiny, and how appraisal and fair market value assessment issues will be addressed. If field opinions are not adequately reflected, the system could produce unintended side effects contrary to its original intent."

In practice, the most sensitive issues for the industry are private sales and appraisal. Much of the art market’s transactions have traditionally taken place out of public view. This explains why the gallery sector is more concerned about 'what and how much must be disclosed' than about the reporting system itself. From the industry's perspective, information such as transaction counterparties, artwork prices, and ownership history are not just administrative data, but core business assets.

Jeong Sook Kim, public relations director of the Galleries Association of Korea, said, "At first, there were concerns that the reporting system might contract the market, but upon reviewing the details, there are not as many significant changes as initially feared. However, because clients involved in private sales often prefer not to be exposed, there is some apprehension about these aspects." She added, "What the association is more sensitive about, in fact, is the issue of appraisal and fair market value assessment. Artworks cannot be evaluated solely by data, so it is important to preserve the expertise and credibility in appraisal that the association has built over time."

This content was produced with the assistance of AI translation services.