Apparently Itch updated their initial announcement on the ongoing situation yesterday. I was not aware of this, and only became aware because I decided to re-read/re-check the announcement today. For those like me that weren't aware, it's at the same address: https://itch.io/updates/update-on-nsfw-content. Scroll down to the addendum and take a look. My comments below:

1. They claim they mass-delisted because they have less direct info on games due to the laid-back nature of the site, and thus delisting was required pending manual review, unlike Steam. 

Fine, whatever.

2. They're currently begging for the right to still exist as a company from payment processors:

"The situation is evolving as we await final determinations from our current payment processors, Stripe and PayPal. There are still unknowns that prevent us from providing a fixed timeline."

That explains what's currently ongoing at least.

3. But the begging is pointless, because it's already over:

"We have suspended the ability to pay with Stripe for 18+ content for the foreseeable future."

This basically means payment for +18 titles is dead on Itch. The only two options are Stripe and Paypal, and Paypal is FAR more skittish. If Stripe's gone, Paypal WILL follow.

4. They're trying to negotiate and set up 18+ friendly processors

"In the meantime, we are actively reaching out to other payment processors that are more willing to work with this kind of content."

Yeah, good luck with that. 

Such processors DO exist, SubscribeStar proves as much. However:

 1. This will now be credit card ONLY. Kiss any Paypal access goodbye. 

2. The downside of "high risk" processors, high risk recievership banks is that some other banks servicing people's cards just...refuse to do business with them because they're icky. 

A lot of people don't realize this: it's not just Visa or Mastercard running things. If your bank doesn't want you to buy from a particular vendor, they can just say no. From experience, something like 5% of people with totally valid US cards just...can't do business with SubscribeStar. Likely, buying 18+ on Itch in the future will work the same way.

5. They claim they're not stealing games from people's libraries.

"Pages that are “deindexed” are still accessible if you own them. They have not been removed from your library or collections."

This is a very confusing and convoluted situation. 

When No Mercy was first attacked, I bought in on Itch in protest. Its thumbnail is gone in my library, and of course the store page is gone. If I click "Download", there is nothing there to download. HOWEVER, if I do the same for another game that was banned and removed that I own, I can indeed still download the files. Likely, the No Mercy devs voluntarily removed their files after being banned, as they wanted to leave the site for good. This creates confusion however, because they're almost certainly not the only ones doing this. I'm sure a number of creators with banned games turned the downloads off, not considering that this would nuke people's libraries. I myself briefly disabled downloads on GT, because it was the only way to halt new sales. Users then see this and think Itch has removed the game.

The problem here is that the site is poorly designed. A creator shouldn't be able to disable downloads for games ALREADY PURCHASED. That should be a separate entity from the basket of digital goods someone gets when they purchase the game. There should be two separate bins: "The game stuff, as I purchased it" and "the game stuff, as it currently stands". Game creators should be able to ADD to "the game stuff, as I purchased it" as new files are added, but not subtract. But it was likely done this way for the sake of simplicity and to minimize the amount of hosting they would have to do.

6. They claim payouts will not be effected by this

IE, that they will still pay out money collected by creators regardless of whether their games are banned. The claim is that the mention of doing so in their adult policy is for the extreme circumstances of those aggressively abusing the TOS,  uploading violating games and attempting to immediately cash out before being caught. They say this won't be applied to ordinary NSFW creators.

"The current situation is a special circumstance. We have no interest in withholding anyone’s earnings."

Great, hope that's true. Seems at least reasonably possible that it is. We'll see.

7. They may aspire to be the UK

"Our immediate focus has been on content classification reviews and implementing stricter age-gating on the site."

It is difficult to imagine any workable "stricter" age gating than what is currently on the site. You already have to be an adult to have a credit card. Itch already does "soft checks" requiring users to attest they're over 18, and requires 18+ games to be properly marked as such in their metadata. There is no "stricter age-gating" other than demanding photo id like every fucking other place on the internet decided to THIS YEAR. If that happens, I'm leaving Itch. I imagine a lot of other people will too.

Overall: When it comes to payment processor structure, I hope they have the balls to become SubscribeStar. Less than ideal, but workable. But probably they'll just become the UK, and then die, just like Tumblr died. This update is a weird mix of good news and complete hopelessness for the situation on this site. But as before, all we can really do is wait and see. At least now I'm no longer dependent on Itch.