Decentralized finance protocol Neutrl halted minting and redemptions for NUSD after undisclosed circumstances impacted protocol reserves. The suspension affects approximately $53.6 million in NUSD in circulation.
Neutrl announced the pause Thursday, citing legal counsel, and suspended other protocol functions while assessing the impact. The protocol withheld details on the specific asset or counterparty involved and did not confirm whether reserves incurred a realized loss. No timeline for resuming operations was provided.
Structured-yield protocol Strata also paused minting, redemptions and related functions for contracts within its Neutrl market, which supports NUSD-linked products. Strata confirmed its other markets remained operational.
The halt prevents approved counterparties from exchanging NUSD tokens for underlying backing assets. Neutrl stated it would communicate timing and next steps as information becomes available.
NUSD is designed to track the U.S. dollar using yield-bearing crypto assets and market-neutral strategies. According to RWA.xyz data from Friday, NUSD traded at approximately $0.9984 with 615 holders and 347 active addresses over the preceding 30 days.
NUSD market capitalization stood at about $53.6 million on Friday, down 18.4 percent over the past 30 days. Monthly transfer volume fell 72.4 percent to $71.4 million.
A February risk assessment by BA Labs had previously classified a proposed Neutrl integration as higher risk, citing concerns regarding counterparty, operational and liquidity exposure. At the time, NUSD supply was estimated at $226 million with reserves totaling $233.7 million, implying a collateralization ratio of 103.6 percent. BA Labs noted that more than 87 percent of reserves were held through Fireblocks, with smaller portions on centralized exchanges.
The assessment highlighted that direct NUSD redemptions were limited to counterparties with Know Your Customer or Know Your Business approval. Requests exceeding the liquid buffer could be queued for completion within 48 hours, though without a definitive guarantee.
Verification platform Accountable stated on May 25 that its Neutrl dashboard offered continuous cryptographic proof that NUSD reserves matched protocol liabilities, providing a different perspective on reserve status prior to the suspension.
