Neutrl halts NUSD redemptions after reserve issue

Neutrl announced on Thursday that it had suspended minting and redemptions for its NUSD synthetic dollar and paused other protocol functions on legal advice after unspecified circumstances affected protocol reserves. The halt prevents approved counterparties from exchanging NUSD for backing assets while the protocol assesses whether reserves were impaired. No asset or counterparty has been identified and no timeline was given for resuming normal operations.

Structured-yield protocol Strata later paused minting, redemptions and related functions for contracts in its Neutrl market that support several NUSD-linked products. Strata reported that its other markets continued to operate.

About $53.6 million in NUSD was in circulation at the time of the suspension. Data from RWA.xyz showed NUSD’s market capitalization at roughly $53.6 million, down 18.4% over 30 days, and monthly transfer volume falling 72.4% to $71.4 million. Over the prior 30 days NUSD traded near $0.9984, with 615 holders and 347 active addresses. Those figures do not establish a direct link between earlier supply changes and the current reserve issue.

On May 25, verification platform Accountable reported that its Neutrl dashboard provided continuous cryptographic proof that NUSD reserves matched the protocol’s liabilities. A February assessment by risk adviser BA Labs classified a proposed Neutrl integration as higher risk because of counterparty, operational and liquidity exposures. BA Labs noted direct redemptions are limited to KYC- or KYB-approved counterparties and warned that redemption requests exceeding the protocol’s liquid buffer could be queued for up to 48 hours without a guarantee of completion.

BA Labs’ analysis estimated NUSD supply at $226 million and reserves at $233.7 million at the time, implying roughly a 103.6% collateralization ratio. The report found more than 87% of reserves held through Fireblocks, with smaller amounts on centralized exchanges. Neutrl has not confirmed current reserve levels or whether holdings at any specific custodian were affected.

NUSD is designed to track the U.S. dollar using yield-bearing crypto assets and market-neutral strategies rather than bank deposits. The suspension limits approved counterparties’ ability to redeem NUSD for its backing assets while the protocol evaluates its reserves. Neutrl indicated it will provide updates when more information is available.