What Does ‘Operation Choke Point 2.0’ Mean for the Adult Industry?
Finding banks that will back businesses has grown more difficult for many in the adult industry, including those in the larger sex labor and sex tech industries, OnlyFans creators, and porn production firms. Many have found it difficult to obtain loans and investment possibilities as a result, and many have had their requests for financial assistance turned down. and even prohibiting several artists and service providers from receiving payment, creating, maintaining, or gaining access to a bank account.
For this reason, the adult business has been greatly influenced by the emergence of alternative payment methods like cryptocurrencies. enabling businesses in the sector to avoid these strict rules and turn a profit. This has been a lifesaver for sex workers and content providers in making sure they get compensated for their services.
But many in the sector are concerned about how this would affect business in light of the recent restrictions introduced by the Biden administration, dubbed Operation ChokePoint 2.0, which aim to combat cryptocurrency and tighten banking regulations.
This essay from Adult B2B Marketing examines the background of Operation Chokepoint and the potential effects of the new rules on the adult market as a whole.
What was the Operation Choke Point?
The US Department of Justice launched Operation Choke Point in 2013 to look into banks and payment processors that were thought to be high-risk and perhaps implicated in fraudulent conduct during the Democratic administration. The original program was criticized for unfairly targeting legitimate businesses, like gun dealers and the adult entertainment industry, and for putting pressure on banks to deny them access to financial services, despite its good intentions to combat fraudulent purchases and scams. The initiative was formally discontinued by the Trump administration in 2017, citing worries about government overreach and possible harm to legitimate businesses.
By now, it’s safe to say that its effects have been felt for some time, as banks and online payment processors like Venmo and Paypal have put pressure on the adult industry to curb the growth of porn and entertainment. For instance, the 2021 OnlyFans policy revisions aim to outlaw pornographic content on the platform (which is odd as the business was established in 2016 to profit from adult content providers utilizing social media to market their stuff). Tim Stokley, the creator, gave “the banks” as the explanation for why they had modified the policy in the first place, even though it was overturned a few days later.
As a result, a lot of adult industry “high-risk” firms have resorted to cryptocurrencies and other alternative payment methods. However, a further wave of bank and cryptocurrency crackdowns in 2023 has been dubbed Operation Choke Point 2.0. However, what is it?
Operation Choke Point 2.0: What is it?
What then is 2.0 Operation Choke Point? The Biden administration suspended the Trump-era regulation earlier this year, which would have given everyone equal access to banks. Democrats and Federal Regulatory agencies have been taking aggressive measures since then to prevent banks from providing financial support for cryptocurrencies. This happened following the demise of the cryptocurrency exchange FTX and the contentious frauds. Although it may be attempting to portray itself as a crackdown on fraud and con artists, many perceive this increased regulatory scrutiny as a war against cryptocurrency with the goal of driving it out of the financial system permanently.
Many high-risk businesses require additional information about what this may entail, even if it claims to have updated its objectives and actions (focused on unlawful internet markets, fraudsters, and bad actors while assuring compliance with existing legislation).
Its continued concentration on ‘high-risk’ industries, such as the adult entertainment sector, has drawn criticism about concerns of due process, anti-discrimination legislation, and the proper distribution of regulatory authority. By preventing cryptocurrency businesses from using banking services, they are preventing them from operating by making it impossible for them to manage their operations and pay employees.
However, what would this entail for companies and producers in the adult entertainment sector? In the following section, let’s investigate.
What Effect Does This Have on the Adult Entertainment Sector?
Many celebrities in the adult business alleged that their Metro Bank bank accounts were wrongfully closed during the first Operation Choke Point in 2014. In 2022, Wells Fargo bank had a similar incident once more, and many users of other payment methods like PayPal and Venmo also had their accounts suspended. Many people are unable to qualify for reimbursements or have access to their hard-earned money because they have lost their earnings. According to a research by the FSC, forty percent of adult industrial workers have experienced prejudice in banking and have been refused access to their bank accounts.
The stigma and discrimination faced by adult content providers have a significant impact on people’s lives. With artists facing unemployment, loan denials, and even rejections from real estate agents.
This led a lot of people to start making payments with cryptocurrency. Take a look at NSFW.app, a platform for adult content providers to sell their work for Web3 fees.
However, the adult industry and its creators may be unfairly denied financial access as they deal with banking discrimination as a result of the Democrats’ new crackdowns (combined with the Republican state’s war on the porn industry, as they have already passed multiple age ID laws for porn sites). The adult business used to be able to safely and securely accept payments using cryptocurrency, but now that the federal government is cracking down on it, things are looking dismal.
Since they unfairly target “politically controversial businesses,” such as the adult entertainment sector and its producers, these new crackdowns have been called “unconstitutional.” These artists run the risk of losing their jobs, houses, and lives since they are unable to access their funds if they do not have access to banks.
Many activist groups, such as the ACLU (who has filed a lawsuit against Mastercard for their discriminatory rules towards adult industry producers and sex workers) and the FSC, are attempting to stop Operation Choke Point 2.0 before it even gets underway, thus it is unclear what the final effects will be. It may signal a reversal in the direction of the federal decriminalization of adult services and sex work in the United States. Furthermore, attitudes regarding sex, pleasure, and the adult business may take a significant turnback in light of the new state regulations that target porn websites.
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