So … for starters, as others have pointed out, the situation you are referencing does not sound particularly healthy, for the reasons others have referenced. I don't know any but the scarcest of details here, but, at least as this is presented here, it isn't great at all, and is not an example of safe, sane, consensual play.
On a more … elaborative front, what the OP is doing here is conflating two unrelated but potentially important topics in kink: predicament [bondage] and safewords. These aren't quite the same thing, and that distinction is relatively important.
It IS totally ok to run a scene like:
Ok I'm going to spank you, hard. You can tell me to stop, but telling me to stop means I will deny you your orgasm tonight.
That's a safe, sane, (potentially) consensual scene descriptor (assuming both sides agreed that impact play, control, and denial were on the table for a scene). This sort of thing is popular enough that there's an entire subgenre of bondage (predicament bondage) dedicated to playing this way, and it can easily be ported to other fetish play. One of my earlier friends and play partners was a particular fan of this style of play. She loved devising devious “traps” and “choices” for the sub to make - it was a control trip for her, and a huge part of the fun.
At that point, the “choice” becomes part of the scene. I want to emphasize that I'm not saying that the “safeword” becomes part of the scene, because it does not…if it does it isn't a “safeword” anymore. A safeword is a word, phrase, or other indication that is and always remains completely external to the scene. It never becomes part of the scene itself - it's purpose is exclusively to pause or end the scene. It's not kinky. It's expressly and permanently ‘vanilla’ - it is the last connection to the “normal world”, to safety. To allow it to become anything else takes away that inherent power, and with it that safety.
If the choice itself is part of the scene, however, and everyone agrees to this, and everyone understands that this is no longer a safeword (best practice is to never confuse those two - just never call it a safeword in the first place) … well, then there's nothing inherently unsafe or bad about it. Sure, by all means, go for it, can be fun.
There are variations on this, including long term variations for ‘lifestyle’ players (the variant might be “Ok, well, since you didn't let me spank you last night, tonight you don't get TV time”) but the usual caveat applies to any lifestyle stuff - you need to make sure everyone fully understands what ‘lifestyle’ or ‘24/7’ play means, is fully consenting to it, including actually being informed on that consent, etc. Maybe that means you work up to those sorts of longer running scenes. Maybe that means you schedule time for regular “out-of-scene” time? Maybe that means you have close mutual, independent friend(s) supervise your scene to confirm that no real abuse is happening. Maybe all of the above. But even then, even if you want to play that way, you still can't call that choice a “safeword” - it isn't. If you play that way, there probably still should be a true “safeword” - which says “this stops the scene completely”. There can't be a consequence for using that word, since consequences are part of kink, and once that word is used, well, kink isn't there on the table anymore. Consent has been (maybe only temporarily, but still definitely) withdrawn, and so both sides need to step out and reevaluate before there can be any more kink going on.