I believe that after 10k USD additional AML regulations kick in. Then there are a related class of pseudo-crimes around structuring payments to avoid the 10k threshold. Part of it may be PayPal's policies, but as I understand these things are generally to cover things on their end from regulatory risk factors.

That's just one of the headaches they deal with. Also one of the reasons for using cryptocurrencies. PayPal may be creating the worst of both worlds by combining the complexity of cryptocurrency transactions with the need to abide by byzantine regulations.