How Does the Legal Enforceability of a Tokenized Derivative Compare to a Traditional Contract?

The legal enforceability of a tokenized derivative is a complex, evolving area. While the underlying smart contract code executes automatically, the legal standing often depends on the jurisdiction.

A traditional contract is explicitly governed by established contract law. For a tokenized derivative, legal enforceability is typically achieved by having a traditional legal agreement that references the smart contract, ensuring the code is legally binding.

Without this link, the code alone may not hold up in court.