OnlyFans Shows How the Banking System Is Politicized

26 August 2021

Recently, the noted content subscription service, OnlyFans, announced a move away from sexual content. Specifically, the platform announced a ban on explicit and sexual content (while still permitting some more innocuous nude content). The move raised eyebrows; OnlyFans banning sexual content is like a lion announcing its intent to become a vegan or soccer star Lionel Messi banning his left foot. Sexual content is quite simply OF’s raison d’être.

According to the platform’s founder Tim Stokely, blame lies with major banks such as Bank of New York Mellon. “The change in policy, we had no choice,” Stokely revealed to the Financial Times. “The short answer is banks.”

CoinDesk columnist Nic Carter is partner at Castle Island Ventures, a public blockchain-focused venture fund based in Cambridge, Mass. He is also the co-founder of Coin Metrics, a blockchain analytics startup.

The platform later reversed itself, stating that it had “secured assurances necessary to support our diverse creator community,” suspending the planned policy change. But the complete pivot, though subsequently walked back, was startling. How could payment processors or banks cause a platform largely used for sexually explicit purposes to renounce its entire business model, even if temporarily?

Anyone who is vaguely familiar with payment processing will not be remotely shocked by the episode. Sex-related internet platforms have been targeted for financial exclusion for the better part of a decade. While the government cannot, under the First Amendment, ban perfectly legal industries like adult entertainment, it can encourage banks (and by extension, payment processors) not to support those industries. That banks are effectively extensions of the state. They have sole access to Federal Reserve master accounts, are highly regulated and own extremely scarce bank charters. That all means that the government can make policy through banks without passing laws.

Far from the narrative being spun by liberals about the OnlyFans episode being further evidence of a radical, Puritan agenda being imposed by wannabe Christian theocrats, the identification of pornography as a “high-risk” industry began with a shadowy Obama-era program known as Operation Choke Point.

The approach was simple: The Department of Justice, in conjunction with the Federal Deposit Insurance Corp. (FDIC), realized around 2012 it could exert pressure on politically disfavored industries under the guise of eliminating fraud. The approach involved threatening banks with expensive and reputation-damaging investigations and subpoenas if they failed to coerce payment processors providing services to these industries into cutting them off. 

Through Choke Point, the DoJ and FDIC deputized banks and turned them into an enforcement arm of the government. That approach was and remains legally questionable. Critics questioned the DoJ’s standing to pressure banks to redline whole industries without establishing actual legal malfeasance.

By vaguely threatening banks (and by extension, payment processors relying on those banks), the DoJ did not need to rely on legislation to ban entire industries de facto. They could simply choke off their financial lifeblood and compromise their ability to operate. Much like the government’s extra-legal – but still apparently persuasive – entreaties to Big Tech oligopolies to deplatform disfavored content (the private sector isn’t bound by the First Amendment, after all), Choke Point relied on threats of financial enforcement and expensive subpoenas to obtain compliance. When the Constitution constrains the state, the government is apt to find end-arounds by mobilizing the private sector. Banks, of course, are not “just private companies,” as the pro-censorship refrain goes today. They are agents of the state, but just distant enough that persuading them to “derisk” disfavored industries wasn’t blatantly unconstitutional.

Ostensibly focused on stopping legal but distasteful businesses like payday lending, Choke Point quickly ballooned out of control. By 2014, the FDIC’s website listed 30 merchant categories associated with “high-risk” activity, many of them perfectly legal (at least in many states). Those included ammunition and firearms sales, coin dealers, fireworks sales, “as seen on TV” sales, tobacco sales, travel clubs, credit repair services and pornography. Regarding the latter, Choke Point historian Iain Murray has speculated that porn was included not because of any puritanical sentiments at the Obama DoJ, but because its high chargeback rate caused it to be associated with other “high-risk” industries.

Choke Point found inspiration in the online poker ban from 2011 through the Southern District of New York’s action against three major poker companies, which many Bitcoiners will remember clearly. The poker companies were primarily indicted for circumventing a 2006 law, the Unlawful Internet Gambling Enforcement Act, which effectively made processing gambling-related payments illegal. As a result, Full Tilt and PokerStars began concealing the nature of payments in order to retain financial access to their customers. It was this deception that ultimately led to criminal charges. If that sounds reminiscent of the plight of certain stablecoins – whose problems stem from finding end-arounds bank exclusion – it’s no coincidence. Walling off an industry from financial services and scrutinizing its attempts to reconnect with customers is an effective means of criminalizing a politically unpopular industry.

Choke Point 1.0 eventually came to an official end when a number of policymakers realized what the DoJ was doing and raised concerns. Missouri Rep. Blaine Luetkemeyer, a Republican, led the charge to shame the DoJ into ending the practice in 2017, but the damage was done. Choke Point did not disappear; rather, it was simply internalized by banks and payment processors. The message to payment processors, while implicit, remains clear: Support politically exposed businesses and face a loss of banking.

One must merely observe today how wary financial services companies are of servicing politically exposed individuals or firms. Examples abound. In 2018, Bank of America and Citigroup abruptly deplatformed firearms manufacturers. Twelve Democratic Senators promptly followed that move by demanding that 11 other major banks follow suit. Not satisfied with merely deplatforming firearms companies, Bank of America has begun voluntarily informing the federal government about its customers’ gun-related activity – all without getting subpoenas.

Firebrand progressive Alexandria Ocasio Cortez (D-N.Y.) has indicated her willingness to employ her seat on the House Financial Services Committee to prosecute social issues, including private prisons. In response to a pressure campaign, numerous banks withdrew their support for the Dakota Access Pipeline. And this tone extends to the very top. While the Brian Brooks-led Office of the Comptroller of the Currency under then-President Donald Trump passed a “fair access” rule designed to prohibit Choke Point-style selective platforming by banks, the Biden OCC promptly rolled back the rule.

This belief that financial services should be weaponized for policy outcomes explains enthusiasm for central bank digital currencies among progressives, who worryingly extol the virtues of a Chinese social credit scheme with American characteristics. Choke Point was just an appetizer: This dismal future portends a world where it’s not just Alex Jones and Nick Fuentes who are kicked off the financial internet, but any conservative expressing subversive thoughts online. Naturally, the would-be architects of these schemes do not devote much thought to the risk of a wholly politicized payment system falling into the hands of their political opponents.

Trump was not particularly interested in deputizing financial infrastructure for political adventurism, but his successor Biden certainly is. Liberals decrying the OnlyFans ban should consider it a mere taste of what a wholly politicized financial sector might look like. Had Trump been more competent, he might have sought to use such underhanded tactics to deplatform abortion clinics, progressive nonprofits, educational institutions peddling critical race theory, teachers’ unions and other causes he politically objected to. It just so happens that the instruments of state power in this context have largely been wielded against conservatives so far, but that may not last forever.

If there’s a silver lining in the OnlyFans episode, it’s the reminder that it can happen to you, too. The OnlyFans deplatforming is an exception in that, for once, it was a liberal cause that was threatened with bank exclusion. The current anti-sex worker agenda – despite a solidly blue administration – is simply a reminder that censorship, once normalized, always strays from its initial confines. If Choke Point continues its unacknowledged revival under Biden, the progressives who by and large support selective financial exclusion (just witness the jubilation when rightist platforms like Gab and Parler have their payment relationships stripped) should consider what a similar program might look like under a President Cotton, DeSantis or Hawley.

The bottom line is that platforms like OnlyFans shouldn’t be marginalized via an opaque process involving extra-legal guidance emanating from unaccountable bureaucrats and regulators. We are still nominally a nation of laws and constitutional constraints. Instead of petitioning the state to ban one’s ideological enemies from financial infrastructure, and being taken by surprise when the political pendulum swings back, we ought to embrace neutral, apolitical financial infrastructure. OnlyFans is a potent reminder: You simply never know when you’ll be on the receiving end of the stick.

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