**1. Introduction**

Distributed-ledger techonology (hereinafter, DLT, mostly known in its blockchain version or variant) and tokenization as a device to incorporate and exchange data (in the so called DLT tokens) are jointly considered within a market public- and private-law and also within a contractual legal and economic context, an efficient way to obtain the valid representation of credit rights arisen from contracts. Such credits are enforceable in courts against the issuer of the token or person on behalf of whom such issuer acts. Eventually, DLT tokens can validly represent *in rem*, rights in favor of the token holder.

In both cases, tokenization is used in blockchain DLT markets for fast, safe, and law-compliant:

a.Transmission of the rights represented and possibly incorporated to the token, after the issuance and legal configuration of such rights in accordance with an off-chain contract (ordinarily under initial coin or token offering -ICO/ITOregulation) between token issuer/offeror and accepting investors, documented in an informative whitepaper similar to the initial public offering prospectus.

b.Exercise of such rights and fulfillment of the corresponding obligations, as the token holder is entitled to claim the contents of the represented rights against the issuer or linked third party.

During the issuance of the tokens, the phenomenon of tokenization technically occurs. It can consist either in the creation of virtual assets (connected or not to a metaverse of investors, as is typical of NFTs) or in the representation of preexisting rights, which have arisen from the celebration of an investment contract, a service or purchase agreement, a specific non-investment contract celebrated to grant tokenized or digitally represented rights between the issuer or creator of such rights and token buyers; or between a generator or creator of tokens other than a financial issuer or financed subject (legal person within the context of the Proposal for a Regulation of the European Parliament and of the Council on Markets in Crypto-assets, and amending Directive (EU) 2019/1937 -Brussels 24.9.2020, COM(2020) 593 final, 2020/0265 (COD); hereinafter, MiCA).

A previous contract between platform manager and issuer is necessary in order to operate under DLT and decentralized financial (DeFi) platform. Such a contract is complementary and additional to the previous contract between the financial issuer and the investing public or interested in receiving tokenized services or products.

In any case, the tokenization or creation of tokens as a mechanism for holding and disposing of virtual assets is an efficient technique for both the creator and the target public of the offer, especially when compared to the classic non-DLT or off-chain (off the DLT network) centralized process. Three practical basic reasons of efficiency linked to the use of DLT support this affirmation:


Generally speaking, tokens or crypto-assets tradable under DLT conditions can contain rights arising from financing contracts (loan and partnership) entered into or arranged prior to the tokenization, and sometimes even before the creation of

#### *NFT Legal and Market Challenges in Permissioned Blockchain Networks DOI: http://dx.doi.org/10.5772/intechopen.106460*

the DeFi marketplace or DLT platform habilitating DLT-network token contracting services. On some occasions, tokens arise from a network financial agreement, then being called cryptocurrencies by markets in the sense of payment tokens (serving as a means to extinguish debts). In other cases, tokenization comes from a network service contract, or derives from network developments or the provision of services related or not with the blockchain, but anyway under DLT (as in the case of utility tokens, deserving special rules in accordance with EU MiCA regulation). There are also crypto-assets exclusively used as currencies, thus serving as a mechanism for payment and extinction of credits and debts, or as a means of token exchange, also allowing the disinvestment or profit collection by exiting from a tokenized investing position, as in conventional finance. Finally, some tokens are hybrids, participating to varying degrees in the characteristics of payment, utility, and investment tokens; thus, different types of legal businesses can be configured to exchange virtual or real wealth by representation in a decentralized financial system (DeFi).
