Make no mistake, this is yet another example of Christian fascists putting pressure on payment processors because they can't mind their own fucking business.
Etsy has been rapidly going downhill for a while now, in many ways. It's a shame...
Does Ravelry allow nudity in their pattern sales? I think so, right? There's also some new site that's modeled after Etsy, except it's like a worker co-op or something cool like that. Not much on there yet though
I'd be surprised if this isn't because some xtian fascist got caught with sex toys in their search history, and claimed it was Etsys fault for suggesting it instead of just being an adult and saying "yeah I was looking up dildos". Or it was a horny teenager that some over controlling parent is freaking out about and rather than actually parent, they are going on a rampage because "their baby would never look at those sinful things".
So nudity and depictions of sex/etc, I get that they're annoying but think they should be effectively forced to allow once they're at a certain scale for similar reasons as anti-trust laws. (With KYC rules because trafficking and underage shit.)
Sex toys? Used shit with bodily fluids? I think they're perfectly justified not to want to deal with that. There are all sorts of ways that can blow up that they're not equipped to prevent.