Hedera has announced its participation in the Distributed Ledger Technology (DLT) Innovation Challenge, an initiative launched by the Bank of England in collaboration with the Bank for International Settlements Innovation Hub (BISIH) London Centre. This challenge aims to explore how wholesale central bank money could be transacted and settled on external programmable ledgers not operated by the Bank of England.

The DLT Innovation Challenge, running through the autumn of 2025, invites firms to demonstrate secure methods for transacting and settling central bank money on external ledgers. Hedera participated in the challenge and attended the showcase event hosted by the Bank of England and BISIH in October 2025.

Exploring Trust in Decentralized Environments

The challenge focuses on environments where trust is not inherent, requiring participants to rely on mechanisms other than central bank control to ensure security, finality, and integrity. Through this initiative, the Bank of England and BISIH aim to test how trust can be established in decentralized or externally governed infrastructures, drawing insights that may inform the Bank’s wider wholesale experimentation program.

It is important to note that the challenge does not reflect any intended policy by the Bank of England or BISIH. The learning outcomes are expected to provide valuable insights into how distributed ledger technology can support the future of money and payments.

Hedera’s Role and Technological Contributions

Hedera, known for its public network governed by leading global institutions, combines enterprise-grade security with transparent, decentralized governance. This model is particularly suited to regulated environments such as banking and financial services. Hedera’s governance structure, operated by a council of 31 organizations across six continents and 11 industries, ensures diversity, accountability, and resilience.

At the core of Hedera’s network is the Hashgraph consensus algorithm, which achieves asynchronous Byzantine Fault Tolerance (aBFT), the highest level of security in distributed systems. Transactions on Hedera achieve finality in 2.5–3.5 seconds, are immutable, and incur predictable, low-cost fees fixed in USD. These features are crucial for wholesale settlement and central bank digital currency (CBDC) exploration.

Hedera’s participation in the DLT Innovation Challenge highlights its expertise in secure, high-performance consensus and transparent governance. The network’s hashgraph consensus and EVM-compatible architecture enable tamper-proof settlement, interoperability, and auditability, laying the foundations for the next generation of trusted, decentralized financial systems.

For more information on the Bank of England and BIS Innovation Hub’s DLT Innovation Challenge, visit the official announcement.

Why This Matters: Impact, Industry Trends & Expert Insights

Hedera’s participation in the Bank of England’s DLT Innovation Challenge underscores its role in exploring secure transaction methods for central bank money on external ledgers. This initiative is part of a broader effort to understand distributed ledger technology’s impact on financial systems.

A recent Bank of England report highlights the increasing integration of DLT in financial markets to enable real-time settlement and programmable financial contracts. This aligns with Hedera’s involvement in the DLT Innovation Challenge, which focuses on improving operational efficiency and settlement speed.

A GlobeNewswire report highlights that Hashgraph consensus technology is gaining traction in financial services due to its high throughput and secure transaction processing. This supports the significance of Hedera’s role in the challenge, as its technology is well-suited for compliance-sensitive financial applications.

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