The things I learn when I make the rounds of STEEM.

As far as the question goes, is sex mining a step too far or a natural progression, I don't think it's actually either or, but both. It's definitely a step too far, but given human nature, and the types of personalities that are principally behind cryptocurrencies, it's also inevitable that something like this would happen.

As a society we have the tendency, when left to our own devices, to test the limits of possibility and decency. This would seem to cross over into both.

As far as the legalities of it, I wonder how they get around prostitution laws, and/or pornography laws. My next question would be, how is age verification happening so that minors are not involved in anyway, and then what's to keep this from turning into some kind of sex slave trade? Willing or consenting better be accompanied by signed waivers with proof of identity.

I don't know. Aside from whatever moral issues people can and will assign to this, there are also legal ramifications above and beyond what normally gets involved in blockchain use, period.