Document Title
Umotu Stablecoin Standard (USS) v1.0
A minimum safety, disclosure, and redemption standard for stablecoins supported in Umotu Foundation-maintained software and services.
- Executive Summary
Umotu supports stablecoins to enable global participation, low-friction payments, and respect for monetary sovereignty. Stablecoins introduce risks (issuer solvency, reserve quality, redemption failure, censorship policy, and operational security). The Umotu Stablecoin Standard (USS) defines measurable criteria for evaluating stablecoin safety, transparency, and operational quality. Any party may submit a compliance dossier demonstrating that a stablecoin meets a given level.
USS classifications govern default support in Umotu Foundation-maintained applications. They do not determine protocol-level validity or existence.
USS is designed to allow multiple sovereign currencies to coexist within decentralized digital payment infrastructure while maintaining transparency and safety standards.
USS is not a guarantee, endorsement, or insurance. It is a transparency and risk standard.
Umotu Foundation does not insure, guarantee, or backstop any stablecoin. Classification under USS does not imply solvency assurance, redemption guarantee, or any form of financial protection.
- Scope Limitation
These standards apply only to Umotu Foundation-maintained software and services. They do not restrict protocol-level transfers, third-party wallets, or independent service providers.
Any token may exist and be transferred on the Umotu protocol regardless of its USS classification. Third-party wallets, paymasters, and service providers are free to support any token under their own policies.
The Foundation's role under USS is:
publisher of standards
maintainer of reference applications
operator of the default paymaster
The broader ecosystem retains full ability to:
fork the wallet and apply different defaults
run alternative paymasters with different token policies
support any token at the protocol level
Foundation influence under USS is editorial, not gatekeeping. Power flows from the quality of the standard, not from control over access.
- Definitions
Stablecoin: a token designed to track a fiat currency value (e.g., USD, CAD, NGN).
Issuer: the legal entity responsible for minting/redemption and reserve management.
Reserves: assets held to back stablecoin liabilities.
Liabilities: circulating supply + accrued obligations.
Proof-of-Reserves (PoR): disclosure of reserve composition and liabilities with third-party verification.
Redemption: conversion of stablecoin to fiat (or equivalent) under issuer policy.
Compliance Dossier: a publicly submitted body of evidence demonstrating that a stablecoin meets USS criteria for a given level.
- Principles
USS is guided by five principles:
Safety — reserves must be high quality and liquid
Transparency — users must understand backing, risks, and redemption rules
Redeemability — stablecoins must be redeemable under published terms
Operational Resilience — issuers must withstand attacks and failures
Sovereign Currency Alignment
USS recognizes that stablecoins can interact with national monetary systems in different ways. Stablecoins that are transparently backed by assets denominated in a sovereign currency may serve as digital extensions of that currency within decentralized payment networks.
USS therefore encourages designs that:
maintain clear one-to-one linkage with the underlying sovereign currency
publish transparent reserve disclosures
maintain redemption pathways consistent with domestic financial regulation
avoid structures that obscure currency denomination or introduce hidden leverage.
The purpose of this principle is not to restrict innovation but to ensure that digital payment systems remain compatible with existing monetary frameworks and sovereign currencies.
- Compliance Dossier & Public Evidence
Stablecoin compliance levels are determined based on publicly submitted evidence. Any community member may submit or challenge a compliance dossier.
Submission
A compliance dossier may be submitted by any party for any stablecoin that is deployed on-chain and has a minimum circulating supply sufficient to demonstrate operational maturity. The dossier must include documentation addressing each applicable USS requirement for the requested classification level.
The Foundation verifies submitted dossiers against the published checklist and publishes its assessment. The Foundation acts as verifier of criteria, not gatekeeper of access.
Challenge
Any community member may submit a public challenge to an existing classification by providing counter-evidence. Challenges must reference specific USS criteria and include supporting documentation.
The Foundation must respond to valid challenges within 30 days with either:
a reaffirmation of the current classification with reasoning, or
initiation of a reclassification review.
All dossiers, challenges, and Foundation responses are published publicly.
- Classification: Reserve Tiers
Stablecoins are categorized into reserve tiers based on evidence provided in their compliance dossier.
Tier 1 ("Cash & Bills")
Eligible reserves include:
Central Bank Money (Highest Quality Reserve)
Assets representing direct liabilities of a sovereign central bank are considered the highest quality reserves.
These include:
Central Bank Digital Currency (CBDC)
central bank reserve balances held through authorized custodial arrangements
central bank settlement tokens issued under official monetary authority frameworks
Stablecoins backed primarily by central bank money may qualify for Tier 1 classification provided all other USS criteria are satisfied.
cash deposits at regulated banks
short-duration sovereign treasury bills (e.g., ≤ 90 days)
overnight reverse repos collateralized by sovereign bills
Not allowed:
corporate bonds
equities
crypto collateral
unsecured lending
Tier 1 classification is required for "Gas-Eligible Stable" status in Umotu reference apps.
Third-party paymasters may define their own gas-eligibility standards independent of USS.
Tier 2 ("Conservative Liquid")
May include:
short-duration sovereign notes (≤ 1 year)
AAA money market funds
fully collateralized repos
Must include conservative haircuts and liquidity limits.
Tier 3 ("Structured / Risky")
Includes:
longer-duration bonds
asset-backed structures
crypto collateral
algorithmic stabilization mechanisms
Tier 3 stablecoins are not eligible for stable gas support and may carry additional risk disclosures in reference apps.
- Minimum Reserve Requirements
All supported stablecoins must satisfy:
Full backing: reserves ≥ liabilities (≥ 100%)
Segregation: reserves held in segregated accounts, bankruptcy-remote where possible
No rehypothecation without explicit disclosure and limits
Concentration limits: max exposure to any single bank/custodian
Liquidity: sufficient liquid reserves to satisfy stress redemptions
Stress Test Requirement
Issuer must demonstrate ability to meet:
10% supply redemption within 5 business days, without gating
30% supply redemption within 30 days, with published procedures
- Disclosure Requirements (PoR Standard)
Issuers must publish:
Monthly:
reserve composition breakdown (by asset type, maturity, jurisdiction)
total liabilities
top custodians/banks (with concentration %)
Quarterly:
independent attestation report by qualified auditor/assurance provider
Annually:
full audit (financial statements + reserve controls)
Disclosure must be accessible and understandable to non-experts.
- Redemption Requirements
Issuer must publish:
eligibility (who can redeem)
fees and spreads
minimum/maximum redemption sizes
settlement timeline SLA
dispute resolution process
Minimum standard:
redemption available to at least one broad user category (not "institution only")
clear public instructions for redemption routes (bank, exchange, agent networks)
- Issuer Governance & Legal Standards
Issuer must disclose:
incorporation jurisdiction
licensing status (if applicable)
key officers and compliance contact
sanctions/censorship policy (what triggers freezing, who can request it)
terms for blacklisting/reversal (if any)
Umotu strongly encourages:
independent board oversight
published risk policy
internal controls framework (SOC2-type)
- On-Chain Requirements (Technical)
Stablecoin smart contracts must support:
immutable or timelocked upgrades (minimum delay)
emergency pause policy (clearly disclosed)
blacklisting controls (if present, must be disclosed)
transparency:
totalSupply visible
mint/burn events indexed
contract verification and audits
- Stablecoin Support Levels
USS defines support levels that apply to Umotu Foundation-maintained applications only. These levels do not determine protocol-level validity or existence. Any stablecoin may be transferred on the Umotu protocol regardless of its support level.
Level A — Listed
visible in Foundation reference wallet
transferable within reference apps
Level B — Trusted Stable
recommended in reference app UI
eligible for payout preference defaults in reference apps
Level C — Gas-Eligible Stable
can be used for stable gas / paymaster flows in the Foundation-operated default paymaster
strictest requirements (Tier 1 only, strong redemption SLA, strong controls)
This structure allows broad inclusion without granting everyone the highest trust in Foundation-maintained defaults.
Third-party wallets and paymasters may define their own support levels and policies independently.
- Risk Rating ("Stablecoin Nutrition Label")
Each classified stablecoin should have a public scorecard:
Reserve Tier (1/2/3)
Redemption SLA
Audit cadence
Custodian concentration
Freeze policy
Jurisdiction risk
Historical peg deviations
This scorecard is shown in-app and published alongside the compliance dossier.
- Enforcement: Downgrades and Emergency Actions
Conditions for reclassification or removal of default support:
failure to publish PoR on time
reserve deficiency
redemption suspension outside policy
contract compromise
regulatory action affecting redemption
Emergency Actions (Immediate)
Emergency actions take effect immediately and are limited to:
removing default status in reference apps
disabling stable-gas support in the Foundation-operated paymaster
displaying a warning banner in reference apps
Emergency actions do not affect protocol-level transferability.
Full Delisting (Time-Locked)
Full removal from Foundation reference apps requires:
public notice stating the specific USS criteria that triggered the action
a 30-day waiting period before full delisting takes effect
Exception: the 30-day waiting period may be bypassed only in cases of confirmed fraud, active contract exploit, or confirmed loss of reserves. In such cases, the Foundation must publish its justification within 48 hours.
During the waiting period, the stablecoin remains visible in reference apps with appropriate risk warnings.
- No Insurance or Guarantee
Umotu Foundation does not insure, guarantee, or backstop any stablecoin. Classification under USS does not imply solvency assurance.
No USS classification, listing level, or support status creates any obligation on the part of the Umotu Foundation to compensate users for losses, guarantee redemption, or act as a lender of last resort.
Users bear full responsibility for evaluating stablecoin risk. The USS scorecard and classification are informational tools, not warranties.
- Governance and Updates
USS is maintained by the Umotu Foundation as a published standard. The Foundation's role is to maintain the standard and verify compliance dossiers against it — not to grant or deny permission for protocol-level activity.
Updates occur through:
public draft
comment period
governance vote (for major changes). Governance may not modify core monetary policy or introduce protocol-level token restrictions.
The ecosystem retains the ability to propose amendments, submit alternative standards, and operate independently of USS classifications at the protocol level.
USS is one possible safety standard within the Umotu ecosystem. The ecosystem remains free to adopt alternative standards, risk models, or classifications. USS derives authority from transparency and community trust, not from protocol-level enforcement.