The mystery surrounding one of Twitch's more recent odd decisions appears to have been solved. A small controversy grew after Twitch denied an emote for Twitch streamer SHiFT. Shift primarily livestreams speedruns of SpongeBob SquarePants: Battle for Bikini Bottom and was hoping to get a new "RIP" emote for when they died in-game. The emote features SpongeBob SquarePants' square behind with a rip in his shorts. The emote was denied due to sexual content.
Shift's reaction was to be understandably confused and frustrated. SpongeBob SquarePants, even with his shorts torn, is hardly a sexualized figure but nevertheless, the SpongeBob emote was denied by Twitch. Worse yet, Twitch didn't provide specific or contextual information about why the emote was considered sexual content. Shift was left to solve the issue and resubmit without knowledge of whether they'd solved the issue, whether they'd have to go through the same process all over again.
Luckily, Shift guessed correctly on their first try. They guessed that the only reason the SpongeBob emote was denied was due to a small slip of the cartoon character's underwear showing through his ripped shorts. Shift edited the emote to erase a single line which made clear the area in question was SpongeBob's underwear, instead leaving the area as an awkward empty space in SpongeBob's rear end. The emote passed Twitch's approval process.
It's clear that Twitch saw the underwear shown in the emote and decided that it broke the platform's community guidelines. Precedent shows that underwear of any kind is outside of Twitch's community guidelines, though it's obviously more commonly moderated with regards to real-life underwear. However, it's not surprising that Shift may have believed that SpongeBob's underwear, if anyone's may have been outside of those guidelines.
SpongeBob SquarePants, to be fair, shows his underwear extremely often on his Nintendo cartoon. This includes him tearing his pants and showing his underwear through the rip or simply walking around in his underwear. It's not necessarily obscene, to any degree, because SpongeBob is a sponge. While Twitch's guidelines are certainly clear regarding its rules on underwear now, banning a SpongeBob emote due to its underwear is an entirely too silly line to draw.