Am I allowed to modify the artwork of my NFT and create a new NFT (derivative)?

Yes, if I am the copyright owner of the artwork of my NFT or if I am authorized by the copyright owner of the artwork embedded in my NFT to create a derivative artwork to be embedded in a new NFT. Under Italian law, the work resulting from the elaboration or modification of previous original work is called “derivative work” and it is subject to copyright protection if it has a creative character itself. This must not cause any prejudice to the existing rights over the previous original work, and therefore proper authorization must be obtained by the copyright owner of the previous original work.

Assuming that the underlying artwork is protected by copyright, the exploitation of a
NFT linked to a derivative work is not possible, unless such rights were granted to
the NFT purchaser. Indeed, under French law, the exploitation of a derivative work
requires the authorization of the author of the original artwork. Hence, as a principle it
is not possible to exploit a new NFT derivative.
One may argue that such exploitation would fall under the exceptions provided by
Article L. 122-5 of the French Intellectual Property Code, which notably includes the
“parody” exception. However, this exception is interpreted strictly: the derivative work
must have a humorous intent and does not create any confusion with the original work.

The Copyright law provides the option of derivative work (art. 5, VIII, g, of law 9610/1998). It is necessary to verify the chain of rights regarding the possibility of use, with the authorization of the authors/owners.