In-Depth Analysis: The Regulatory Battle Behind XRP Dropping to $1.35 and the Breakthrough Point of the CLARITY Act

Over the past week, XRP experienced a significant price correction. According to Gate market data, as of March 11, 2026, XRP’s price has fallen below the key $1.50 level, currently oscillating around $1.35, with a weekly decline of over 15%. Market sentiment has become cautious amid macro uncertainties, but the real focus is shifting from short-term price fluctuations to regulatory variables that could fundamentally change XRP’s legal status—the Clarity Act. If this bill passes, the years-long “security” classification controversy for XRP will be fundamentally resolved through legislation.

What are the current structural changes in the market?

This decline in XRP is not an isolated event but a reflection of multiple structural pressures. On the macro level, recent news about G7 countries releasing oil reserves has temporarily eased some inflation concerns, but geopolitical risks and expectations of tightening global liquidity continue to suppress risk assets.

On the micro level, XRP’s technical fundamentals are also under pressure. Data shows many XRP holders are in a loss position, with an average cost basis of about $1.44, meaning each rebound to this level could trigger selling pressure. Whether the critical support at $1.30 can hold is a short-term market focus; if broken, it could trigger a new wave of technical selling. However, beneath these surface fluctuations, a deeper structural shift is the potential shift in US regulatory stance—from “enforcement and regulation” to “legislative regulation.”

How will the Clarity Act end the securities classification debate?

The securities status of XRP has long been a “Damocles sword” hanging over it. Although Ripple’s lawsuit with the SEC concluded in August 2025 with a $125 million fine, this did not definitively clarify XRP’s legal classification. The emergence of the Clarity Act aims to resolve this core issue once and for all through legislation.

The core mechanism of the bill involves redefining the jurisdiction of the SEC and CFTC, establishing a clear, function-based classification framework for digital assets. According to the bill, network tokens like XRP—used for network operation and with a certain degree of decentralization—will be explicitly classified as digital commodities, falling under CFTC regulation, thus removing them from the SEC’s security definition based on the Howey test. Ripple has also submitted a letter to the SEC, arguing that regulation should be limited to “the period of commitment” rather than permanently labeling the asset itself. This aligns closely with the legislative spirit of the Clarity Act. If passed, XRP will gain the same legal status as Bitcoin and Ethereum, no longer subject to securities issuance and trading restrictions.

What are the costs behind the legislative battle?

Despite the promising outlook, advancing the Clarity Act is not without costs. Currently, the legislative process is stalled, mainly over the issue of stablecoin yield provisions. The banking industry strongly opposes allowing crypto firms to pay interest on stablecoins, fearing it could drain deposits and weaken their lending capacity.

The cost of this battle is time and market opportunity. While the White House has proposed a compromise allowing rewards in specific scenarios like peer-to-peer payments, banks seek stricter restrictions. With the summer congressional recess and midterm elections approaching, if the bill cannot pass before July, the legislative window may close, forcing XRP to endure prolonged regulatory ambiguity. This means that, to achieve long-term compliance status, the market may have to tolerate short-term legislative pain and uncertainty.

What does this mean for the crypto industry landscape?

Once the Clarity Act passes, its impact on XRP and the entire crypto industry will be transformative. For XRP, removing the securities label will directly open the door to institutional adoption. Long-term institutional investors like pension funds, insurance companies, and banks, which have been restricted by compliance concerns, could significantly increase their exposure through spot ETFs and other channels.

More importantly, this will push XRP from a mere trading asset toward a financial infrastructure role. Ripple has obtained conditional national banking licenses and is applying for a Fed master account. With the clear legal identity granted by the bill, XRP’s utility in cross-border payments and liquidity management will be greatly enhanced, integrating it into mainstream finance. For the industry as a whole, this signals the dawn of a new regulatory era—where innovation based on clear rules replaces regulatory arbitrage.

How might the future evolve?

Based on the current legislative status, XRP’s future could follow several paths:

Optimistic scenario: If the Clarity Act passes in Q2 or Q3 of 2026 and Ripple successfully obtains a Fed master account, XRP could experience a dual surge in compliance and utility. Institutional inflows combined with substantial expansion of the payment network could push XRP’s price toward new highs of $4 to $5.

Neutral scenario: If the bill’s passage is delayed or includes more restrictions, the market may need more time to digest regulatory benefits, leading to a gradual price increase within the $2.5–$3.5 range.

Pessimistic scenario: If the bill is ultimately shelved, XRP will continue operating in a regulatory gray area, with its price likely reverting to the $1.5–$2 range, waiting for the next catalyst.

Potential risks to watch out for

While optimistic prospects are enticing, risks must be acknowledged.

First, the risk of legislative failure is real. Strong lobbying from the banking sector and disagreements within Congress over anti-money laundering and other issues could stall the bill. If legislation fails, market expectations for XRP’s compliance will be dashed, potentially triggering deeper corrections.

Second, evolving competition cannot be ignored. Even if XRP gains regulatory clarity, it faces fierce competition from stablecoins (including Ripple’s own RLUSD) and upgraded traditional payment systems like SWIFT. The pace of practical adoption may lag behind regulatory gains.

Finally, deteriorating macro conditions could offset micro-level positives. If global liquidity crises worsen or geopolitical tensions escalate, capital may seek safe havens rather than risk assets, regardless of regulatory progress.

Summary

XRP’s current price of $1.35 reflects market sentiment and ongoing regulatory battles. A 15% weekly decline highlights short-term uncertainty, but the legislative progress of the Clarity Act is the key variable determining its medium-term fate. If passed, XRP could transform from a “regulatory orphan” into a “compliance model,” with impacts far beyond price—potentially reshaping the entire crypto industry’s regulatory paradigm. However, the urgency of the legislative window and resistance from the banking sector cast shadows over this outlook. For market participants, short-term volatility may be superficial; the real storm lies in Washington’s legislative halls.

FAQ

Q: What are the main reasons for XRP’s recent price decline?

A: As of March 11, according to Gate data, XRP fell below $1.50. This was mainly driven by macro risk aversion, geopolitical risks, and technical support levels. Additionally, many holders are in a loss position, with an average cost basis around $1.44, creating selling pressure near that level.

Q: What is the Clarity Act? How will it affect XRP’s securities status?

A: The Clarity Act (Digital Asset Market Clarity Act) is a US legislation aimed at clarifying digital asset regulation boundaries. It redefines jurisdiction between the SEC and CFTC, establishing a clear, function-based classification for digital assets. Under the bill, network tokens like XRP—used for network operation and with a degree of decentralization—will be explicitly classified as digital commodities, falling under CFTC regulation, and thus removing them from the SEC’s security definition. This would fundamentally resolve the legal ambiguity that has plagued XRP since 2020, granting it a status similar to Bitcoin.

Q: How likely is the Clarity Act to pass, and what are the main obstacles?

A: Currently, the bill faces significant resistance in the Senate. Major hurdles include opposition from the banking industry over stablecoin yield provisions, fearing deposit drain. While the White House has proposed a compromise allowing rewards in specific scenarios, banks seek stricter restrictions. Additionally, the limited legislative window before the summer recess increases urgency and uncertainty regarding passage.

Q: What happens if the Clarity Act fails to pass?

A: If the bill fails or is delayed, XRP will remain in its current regulatory gray zone. Although the lawsuit concluded, the lack of clear legal classification could slow institutional adoption. Market valuation logic may not fundamentally change, and prices could continue to fluctuate within the current range or decline if expectations are disappointed.