They don't and they don't care, this is just another tool in their censorship box.

Paypal is not receiving transactions from customers, this is pornhub paying it's models and performers, they have a more rigorous KYC process than most banks, performer's age and identity verified and logged as per US code 18 section 2257 requirements. Paypal is just being Paypal.

I don't think customers could pay performers using paypal, I think pornhub was using paypal to disburse commission payments to its downstream. This has very little to do with risk and is all about optics and politics.

"the barriers have kept circulation of print editions quite high compared to the US." I am guessing the 2 or 3 pages of pr0n in most Japanese print newspapers doesn't hurt circulation either.

You can actually do it without telling anybody. Vonage phone #, Internet proxy service to mask you IP, a snail-mail forwarding service that looks like a regular mailing address and you're good to go. Of course, it's only really an option for the self-employed, people who make their money as webmasters, freelance programmers, etc. And you should be prepared to travel frequently, since there is still no substitute for face-to-face when working with a team, setting up deals and building trust with clients, etc.