NUSD supply falls 76% from February level

NUSD supply has fallen by about 76% from the $226 million level documented in February to $53.6 million as issuer Neutrl has suspended redemptions while assessing an undisclosed issue affecting its reserves.
Summary

• NUSD supply has fallen from about $226 million in February to $53.6 million.
• Neutrl has suspended NUSD minting and redemptions while assessing an undisclosed reserve issue.
• NUSD supply dropped 18.4% over the past 30 days, while transfer volume fell 72.4%.
• BA Labs previously flagged counterparty, operational and liquidity risks tied to Neutrl.

Neutrl said Thursday that unspecified circumstances had affected protocol reserves, prompting it to pause NUSD minting and redemptions as well as other functions on legal advice. The protocol has not identified the affected asset or counterparty, disclosed whether the event caused a realized loss, or provided a timeline for restarting operations.

Neutrl has temporarily paused minting, redemptions, and other protocol functions following circumstances affecting protocol reserves. These measures have been taken in the interest of our users, after advice from legal counsel, to preserve an orderly process while the impact is... --- Neutrl (@Neutrl) August 13, 2026

The current $53.6 million supply compares with approximately $226 million recorded by risk-advisory team BA Labs during an assessment in February. RWA.xyz data also showed that NUSD supply fell 18.4% over the latest 30-day period, although neither dataset establishes that the contraction resulted from the reserve issue disclosed this week.

NUSD remained close to its intended dollar value despite the suspension. RWA.xyz priced the synthetic dollar at about $0.9984 on Friday, while monthly transfer volume had fallen 72.4% to $71.4 million.

NUSD redemptions stop with $53.6 million still in circulation

The suspension prevents approved counterparties from exchanging NUSD for its backing assets while Neutrl determines the condition of its reserves.
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Neutrl said it would disclose timing and next steps when more information becomes available. Until then, minting and redemption functions remain unavailable alongside other protocol operations paused following legal advice.

NUSD uses yield-bearing crypto assets and market-neutral strategies to maintain its dollar value. The structure differs from stablecoins backed primarily by cash and short-term government securities because reserve assets can be distributed across custodians, trading venues and investment strategies.

RWA.xyz recorded 615 NUSD holders and 347 active addresses over the preceding 30 days.

Structured-yield protocol Strata also responded to Neutrl's decision by pausing minting, redemptions and related functions for contracts in its Neutrl market. Several NUSD-linked products operate through the market, while Strata said its other markets remained operational.

Strata has paused minting, redemptions, and related functions on its Neutrl market contracts.

This follows @Neutrl announcement that it has paused protocol functions while the impact of circumstances affecting its reserves is assessed.

The pause is limited to the Neutrl market.... https://t.co/XI0EATkLF7 --- Strata (@strata_markets) August 13, 2026

Similar redemption and liquidity questions surfaced elsewhere in DeFi in June after MainStreet-linked MSUSD fell sharply below its intended dollar value. As crypto.news reported on MSUSD, Accountable terminated its verification agreement with MainStreet after saying the protocol was unable to meet its standards. MainStreet maintained that its assets remained fully backed and said the problem involved the shutdown of its third-party proof-of-reserves dashboard.

MSUSD traded at about $0.3781 at the time, while PeckShield said the Morpho msY/USDC market reached 100% utilization. MainStreet subsequently deployed more than $8 million in USDC to support liquidity and said it was seeking another proof-of-reserves provider.

February review put NUSD reserves at $233.7 million

Months before the current suspension, BA Labs had examined Neutrl's reserve structure as part of a proposed integration and classified it as higher risk due to counterparty, operational and liquidity exposure.

Its February assessment estimated NUSD supply at $226 million against $233.7 million in reserves, equivalent to a collateralization ratio of about 103.6%.

More than 87% of those reserves were held through Fireblocks, according to BA Labs, while smaller amounts were maintained on centralized exchanges.

The assessment also examined how users could exit NUSD. Direct redemptions were restricted to KYC or KYB-approved counterparties, meaning ordinary token holders did not necessarily have direct access to Neutrl's redemption mechanism.

When redemption requests exceeded the protocol's liquid buffer, BA Labs said they could enter a queue. Neutrl targeted completion of those requests within 48 hours, but the timeframe was not guaranteed.

The distinction between total reserve value and immediately available liquidity has also surfaced in other yield products. In June, Altura began winding down its stablecoin yield vault after processing more than 8.5 million USDT in instant redemptions within 24 hours.

Altura CEO Ranveer Arora said the protocol had no exposure to MainStreet or its underlying strategies. Some assets in Altura's portfolio nevertheless required normal settlement or redemption periods, leaving the protocol to return funds as capital became available from the underlying positions.

Reserve verification was active months before the pause

Neutrl's reserve structure had also been subject to external verification before this week's suspension.

On May 25, Accountable said its Neutrl dashboard provided continuous cryptographic proof that reserves backing NUSD matched the protocol's liabilities. Neutrl has not said whether its latest reserve issue was identified through that system or through another review.

The protocol also has not disclosed where the affected reserves were held. Its statement did not specify whether the circumstances involved assets under custody, funds held on an exchange, a trading position or exposure to another counterparty.

Proof-of-reserves systems can establish information about assets against reported liabilities but do not necessarily capture every off-chain obligation or guarantee solvency. A June proof-of-reserves explainer detailed how cryptographic attestations can verify holdings while leaving limitations around liabilities, ownership and off-chain obligations.

Synthetic-dollar issuer Ethena has also used outside attestors for its reserve reporting. Chainlink, Harris & Trotter, Chaos Labs and LlamaRisk joined USDe reserve verification in April 2025, with Chainlink sourcing reserve information from custodians, exchanges and blockchain data.

NUSD contracts as stablecoin supply has also declined

NUSD's reduction has taken place during a period of declining supply across the stablecoin market, although the available data does not connect the two developments.

Total stablecoin supply had fallen about $10 billion from its May record by July, including a $7.7 billion decline during June to approximately $312 billion. The June reduction was the largest monthly drop in dollar terms since the TerraUSD collapse in May 2022.

USDT accounted for roughly $6 billion of the decline from its May level, while USDC had fallen almost $7 billion from its March peak. The overall stablecoin market remained much larger than during previous contraction periods, with the June reduction equal to about 2.4% of supply.

Transaction activity did not decline at the same rate. Adjusted stablecoin transfer volume reached a record $1.78 trillion in June, including about $1.21 trillion processed through USDC and $573 billion through USDT.

For NUSD specifically, RWA.xyz recorded a much steeper decline in activity over the latest month, with transfer volume down 72.4% to $71.4 million as supply fell 18.4% to its current $53.6 million level.
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