Would this not run into the copyright issues most other distributed hosting networks run into? Especially since it allows directly monetizing the content.
It appears to already be a home to some fringe stuff.
"Big cities are like financial slave camps - Take a break at the Zenvow Meditation Resort - All crypto Meditation Resort in Portugal" (of course this is crazy, but harmless—at least initially)
I would also like to know what solution has been proposed for that problem.
Probably not that hard. IPFS is not explicitly trying to hide your traffic. If you're seeding copyrighted content, your ISP can be sent whatever the country-supported legal papers are needed to punish you.