Sygnum Bank and FQX, a Swiss-based fintech focused on electronic negotiable instruments, have settled an electronic promissory note using blockchain.

In this pilot transaction, an electronic promissory note, or eNote, issued by FQX, was used by Axelra, a supplier to FQX, to obtain financing from Sygnum 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.

The two companies say that both legs of the transaction were settled atomically, using Sygnum’s stablecoin, DCHF, which is pegged at parity with the Swiss franc, on the Ethereum blockchain.

“With this eNote, Sygnum’s DCHF demonstrates the potential of smart digital assets to transfer value instantly and directly between two parties and provide faster liquidity,” says Martin Burgherr, chief client officer at Sygnum. “As we move towards an agile and more digital economy, this capability will accelerate the development of more performance-based financial products, underpinned by institutional-grade trust.”

According to FQX, its eNotes are directly enforceable in 164 countries around the world, due to the use of qualified electronic signatures. However, digital versions of negotiable instruments are not, in and of themselves, yet legally valid in many jurisdictions, and rely upon contract law to be enforceable.

Industry bodies are keen to tackle this issue. Earlier this year, the International Trade & Forfaiting Association (ITFA) unveiled its digital negotiable instruments (DNI) initiative, as part of its lobbying activities for the removal of legal requirements for physical signatures. Meanwhile, the International Chamber of Commerce (ICC) in April called upon governments worldwide to enable an “immediate transition” to paperless trading.

FQX says that, following the successful pilot, it will now officially launch the eNote this week.