I also initially thought that PayPal's move was related to the censorship of adult content on Steam and Itch. The payment processors keep insisting that they facilitate legal transactions while trying to block anything that makes them feel uncomfortable behind the scenes.
The whole censorship thing has gotten to ridiculously disgusting levels now. A pair of friends of mine have games on Itch that got delisted as part of the censorship -- and both games don't feature adult content! When did excessively-muscled characters in an FPS or overweight animal characters in a fighting game become adult content? Game of Thrones has actual human pornographic material in it which doesn't bother the payment processors, but clothed characters that aren't shaped like "average" people are unacceptable now.
I'd assume PayPal being blocked in many currencies is probably due to fluctuations in international trade and currency valuations. Probably some tariff confusion and sanctions involvement too. Holding smaller currencies can open banks to wide volatility their investors don't want. They really should come out and say this bluntly.