After a series of pilot transactions, FQX, a Swiss-based fintech focused on electronic negotiable instruments, has launched its electronic promissory note, or eNote, solution into the global market, bringing a 2,000-year-old debt instrument into the digital age.

First used during the Han Dynasty in 118 BC, promissory notes are negotiable instruments that enable companies and individuals to obtain finance based on an unconditional promise to pay. Much like other paper-based trade processes, promissory notes are cumbersome and time-consuming to operate. FQX’s solution solves for this by moving them onto the blockchain in the form of an eNote, allowing them to be settled instantly.

The fintech carried out its first trial of the eNote in September last year, issuing an eNote to one of its suppliers, Axelra, which allowed it to obtain financing from Sygnum, a Swiss digital asset bank, to liquidate the trade receivable it held against FQX. The eNote was assigned an ISIN number – a standard securities identification number code which enables the transfer of a security to other investors – and was registered and stored on a distributed ledger maintained by Swisscom, which provides the electronic signatures used to securely issue and transfer them on FQX’s platform.

Both legs of the transaction were settled using Sygnum’s stablecoin, DCHF, which is pegged at parity with the Swiss franc, on the Ethereum blockchain.

Since then, FQX has carried out further pilots with both asset originators and investors, including a global automotive supplier, a Swiss commodity trader, and the German digital metals trading platform Metalshub – which used four eNotes to fund transatlantic shipments of metal financed by private investment firms.

The company says the eNote can be enforced by courts in 165 countries, and will now make it available to both corporates and financial institutions to issue and transfer trade loans and commercial paper, liquidate trade receivables or extend payment terms.

Digitising the promissory note – as well as other finance tools such as the bill of exchange – has been a major focus for the trade finance industry of late, but a lack of legal recognition for electronic versions of the instruments has held back progress. To tackle this, last year, the International Trade & Forfaiting Association (ITFA) rolled out its digital negotiable instruments (DNI) initiative, joining forces with the UK’s Law Commission and ICC UK to lobby for a change in legislation.

“If we’re successful, what that would mean is that the English law, which is this 1882 statute, would be changed, so that it recognises a bill of exchange or a promissory note in digital form,” ITFA’s chair Sean Edwards told GTR at the time.

FQX says that it supports these and other efforts to standardise the technological and legal framework for the digitisation of financial instruments, but adds that it is “already offering a working solution to the market, developed and designed by leading international experts in distributed ledger technology and law”, which can be implemented immediately.