A workaround is to run DisplayLink 1.2. This is what I stumbled on today while talking to a support staff of the dock I am using. I can confirm that this is currently working for me. I hope to be able to switch back to 1.3 soon.
Same here. 4K is available on Big Sur 11.4 on DisplayLink v1.2.0 only. Newest release 1.3.1 does not solve issue with limited resolution to 1080p for 4K monitors