Neutrl Halts NUSD Minting Over Undisclosed Reserve Issue

Decentralized finance protocol Neutrl suspended all minting and redemption services for its NUSD synthetic dollar on Thursday, citing unspecified circumstances that affected protocol reserves. The halt also paused other protocol functions while Neutrl assessed the full impact, acting on legal advice.

Neutrl did not identify the specific asset or counterparty involved, nor confirm whether reserves suffered a realized loss. The protocol provided no timeline for resuming operations.

The suspension directly impacts approximately $53.6 million in NUSD in circulation and prevents approved counterparties from exchanging the synthetic dollar for underlying backing assets.

Structured-yield protocol Strata paused minting, redemptions, and related functions for contracts within its Neutrl market, which supports several NUSD-linked products. Strata said its other markets remain operational.

NUSD is designed to track the U.S. dollar by leveraging yield-bearing crypto assets and market-neutral strategies rather than relying on traditional bank deposits.

According to RWA.xyz, NUSD maintained a market cap of $53.6 million on Friday, down 18.4 percent over 30 days. Monthly transfer volume fell 72.4 percent to $71.4 million during the same period. NUSD traded at $0.9984 with 615 holders and 347 active addresses over the preceding 30 days.

In February, risk-advisory firm BA Labs classified a proposed NUSD integration as higher risk, citing counterparty, operational, and liquidity exposure concerns. BA Labs noted that direct redemptions were restricted to KYC or KYB-approved counterparties and that redemption requests exceeding the protocol's liquid buffer could queue for completion within 48 hours without guarantee.

At the time of BA Labs' assessment, NUSD supply was $226 million with reserves totaling $233.7 million, implying a collateralization ratio of 103.6 percent. Over 87 percent of reserves were held through Fireblocks, with smaller portions on centralized exchanges.

In May, verification platform Accountable stated that its Neutrl dashboard offered continuous cryptographic proof that NUSD reserves matched protocol liabilities.

Neutrl did not identify the specific asset or counterparty involved, nor confirm whether reserves suffered a realized loss. The protocol provided no timeline for resuming operations.

The suspension directly impacts approximately $53.6 million in NUSD in circulation and prevents approved counterparties from exchanging the synthetic dollar for underlying backing assets.

NUSD is designed to track the U.S. dollar by leveraging yield-bearing crypto assets and market-neutral strategies rather than relying on traditional bank deposits.

In May, verification platform Accountable stated that its Neutrl dashboard offered continuous cryptographic proof that NUSD reserves matched protocol liabilities.