Analysis: Adult Crypto Fears As Banking Discrimination Persists

WASHINGTON—Adult entertainment industry trade organization, the Free Speech Coalition, issued a troubling white paper on banking discrimination in the industry in May 2023. Done in collaboration with MelRose Michaels and her Sex Work CEO consultancy, the coalition found “the most common manifestation of financial services discrimination is loss of basic banking services.” Nearly two out of three people earning money from the adult industry have lost a bank account or financial tool. Nearly 40 percent have had a financial account closed in the past year. Mike Stabile, the Free Speech Coalition’s director of public affairs, explained to AVN that there is “no shortage of reasons why we’re experiencing discrimination, but an evangelical pressure campaign against sex, the federal government’s vague regulations around trafficking, and the financial industry’s eagerness to exploit a captive market for high rates all work together.” An assessment such as this is completely accurate. Banks treating legal economic activity as if it were not isn’t surprising. Financial discrimination against businesses and professionals in sex-based industries has existed for decades in this country. In 2016, Fast Company reported on the challenges of startup firms at the intersections of sex and technology. These firms have had challenges securing funding from investors and essential banking services to sell pleasure products, smart sex toys, lubricants, or streaming services.  The Electronic Frontier Foundation has been tracking financial discrimination against the adult entertainment segment for years, as well. In 2014, the foundation published a commentary on Chase Bank shuttering checking accounts based on what they call “morality-based” banking. Fast forward to August 2021, former OnlyFans chief executive officer Tim Stokely announced a ban on pornography on the platform with an exception for nudity in specific cases. It was viewed as a similar demise to how Tumblr saw significant use failure after the popular blogging platform decided to block porn in 2018. Literally six days after the announcement, OnlyFans walked back the policy after literally millions of users and content creators vowed to boycott the platform and shift to friendlier platforms. As a result of that, competing premium fan platforms such as Fansly or Just for Fans saw a rise in popularity and a boom in user base. Stokely, in a wide-ranging chat with the Financial Times, blamed Bank of New York Mellon and JP Morgan Chase for “flagging and rejecting” each transaction from the OnlyFans parent company, Fenix International Limited. He said adult content would remain on OnlyFans indefinitely and that the company has “secured assurances necessary” for that claim to remain steadfast. Then, we have individual cases of adult performers, creators, and sex workers unknowingly losing their basic banking services similarly. Alana Evans, the president of the Adult Performance Artists Guild, circulated a heart-wrenching video on X (formerly Twitter) explaining how Wells Fargo completely closed her bank accounts. In an op-ed she wrote for The Daily Beast shortly after she posted her video, Evans pointed out that “as tax-paying workers, we deserve protection against the biases of big banks.” Where can performers and adult companies find solace, then? For many, the answer rests in the realm of cryptocurrency, token-based economics, and a decentralized payment ecosystem. Think of the vision of Web3. Forbes explains that while “it’s challenging to nail down a precise definition of [Web3],” the consensus is that it incorporates the concepts and existing technologies that allow cryptocurrencies and decentralized payment systems to work. This need for innovation met the heart of adult entertainment-focused technology entrepreneurs who saw the crisis of financial discrimination against porn production companies, porn stars, adult content creators, and more. SpankChain is one such project. Founded by Ameen Soleimani and Wills de Vogelaere, the firm develops blockchain technologies with applications specific to token-based economics in adult entertainment. The crown jewel of this portfolio of projects led by Soleimani and de Vogelaere was SpankPay. Using the ERC-20 Token Standard, guidelines that developers adhere to when crafting their own tokens on the Ethereum blockchain, SpankPay provided adult platforms the ability to accept online crypto payments securely. This was heralded by proponents as a “safe haven” for payments, and in many ways, it was. Independent content creators could additionally accept crypto payments from their clients. While we don’t have exact numbers on adoption, it is clear that SpankPay was used by adult industry personalities. Unfortunately, as is the case with just about everything related to porn we’ve seen, SpankPay’s team had to shut down after their payment services partner, Wyre Payments, terminated their relationship, reports Decrypt. The payment processing platform posted to their X followers the following statement: “After a long and difficult consideration, we have decided to close down…our crypto payment processor that we built as a safe haven for our community.” In a thread, it was revealed that Wyre targeted the SpankPay ecosystem because they partnered with end-to-end processor Checkout.com. Checkout doesn’t permit adult entertainment companies, ultimately rendering the SpankPay system dead. It is worth noting that Wyre Payments has since shut down because of “market conditions.” But, the external and internal analysis surrounding the debate on crypto’s role in the adult industry shows a degree of rising fear. Is this fear justified, though? For Allie Eve Knox, that is a complex answer. Knox served as an advisor to SpankPay and is still involved with SpankChain and a slate of upcoming projects based on their focus on decentralization. “SpankPay’s shutdown was super crushing to us,” Knox told AVN during an email exchange. “We worked so hard on that product, we were in great standing with our vendors, and we were onboarding new crypto users daily.” This was clearly the sentiment at SpankPay, Knox explained. However, recent developments in crypto regulation have led some observers to suggest that decentralized payments and blockchain are no longer viable options for sex workers on the internet. Knox was interviewed by reporter Joel Khalili in a recent explanatory piece for the technology news outlet Wired. Khalili crafted a fair report but insinuated that cryptocurrencies are “turning” on sex workers and “failing them.” Similarly, the conservative news outlet Just The News characterized this “failing,” in the words of Khalili, as essentially a playout of “Operation Choke Point 2.0.” This attribution refers to the Operation Choke Point regulatory enforcement action taken by the administration of former U.S. President Barack Obama. Operation Choke Point gave the Department of Justice broad power to scrutinize and investigate banking and financial services provided to firms in what the Federal Deposit Insurance Corporation (FDIC) characterized as “high-risk” businesses. This ranged from firearms sales, payday loans, fireworks sales, online dating services, and, of course, pornography, escort services, and strip clubs. The administration of indicted former President Donald Trump was sure to end Choke Point in the early days of his presidency, but this was not long-lived, as we have seen in recent years. In Alana Evans’ The Daily Beast column, she mentions the use of the Fair Access to Financial Services Rule issued by the Trump-era Office of the Comptroller of the Currency (OCC) before the incoming administration of current President Joe Biden paused it. OCC would’ve required equal access to the banking system regardless of the industry. This rule covered industries considered politically tumultuous, such as pornography and crypto. But since it was killed, the regulation of banking discrimination against industries that seem risky is broad and ununiformed. “The banks could kick any crypto vendor out,” Knox explained. “That's why we need to fix this [through] legislation…and again, why we turned our focus and time into lobbying for fairness in banking. That is the only way we, or any other company for that matter, can assure fair and honest banking.” The “we” Knox refers to is not just SpankChain but the Free Speech Coalition (FSC). The coalition took to Capitol Hill in Washington, D.C., in May 2023 to meet with federal lawmakers on the issue of banking and financial services discrimination. This lobbying day included talks with the senators’ offices who introduced the federal Fair Access to Banking Act earlier this year. Led by Republican Sen. Kevin Cramer of North Dakota, the act is a bid to formalize the Trump-era OCC fair access rule as a federal banking statute. Though it was presented as a hyperpartisan, ‘anti-woke’ banking solution for politically controversial industries such as firearms sales, the Free Speech Coalition has endorsed this legislation because it requires large banks to provide basic financial services to adult industry businesses and adult performers. AVN reached out to Cramer’s office for comment. Unsurprisingly, our request was not returned by publication time. And, could you blame them? Sen. Cramer is considered one of the most conservative Republican senators in the U.S. Senate and is openly aligned with the far-right, socially conservative flights of the GOP. He supports the Heritage Foundation, which introduced Project 2025 and a long-winded treatise on stripping away the First Amendment rights of porn producers and criminalizing creators, performers, and those adjacent to adult film. I digress. In an analysis of the act, the proposal presents a clear framework that could directly benefit crypto and adult industry firms. One of those benefits could include limitations on any unwarranted regulatory scrutiny on firms that are complying with the laws and regulations already laid out before them.  Operation Choke Point 2.0 could have been prevented, and the Fair Access to Banking Act could be one such guardrail protection that could offer that added prevention layer.  A February 2023 Cato Institute analysis on “Operation Choke Point 2.0” put it best: “So whether today’s experience is in fact a coordinated operation is yet to be seen, but what’s clear is that there should be firm limits on the discretion afforded to financial regulators. Operation Choke Point may have formally ended with the Obama administration, but there were never any limits enacted to prevent it from coming back.”  Coordinated or not, sex work will remain at the center of this crossfire. Add the tinge of crypto uncertainty, which could proliferate into a harsher framework. “It doesn't matter if it's banks, crypto, fintech, or credit cards until we fix the base issues— stigma, bad regulation, profiteering—[we will] continue to be exploited by the financial system,” Stabile concluded in our conversation. “If we can remove even one part of the discriminatory equation, much of the rest becomes untenable.”  For Knox, she is of the same mind but much more bullish on crypto as an ongoing asset for sex workers. “I still see it as a solution and a tool, not the solution," she said. "The legislation for crypto and adult concerns me a ton. These laws are being written by people who don't even understand what they are writing or how the system works, and that’s the concerning part. I will continue to use crypto, continue to consult for crypto companies, and continue to advocate for fairness across the industry.”  Fairness may be closer than we think, but it is up to the adult entertainment industry to continue advocating for it.