I recently had an issue with my PayPal withdrawals being deactivated. I think I found a solution to the problem. Let me know if it worked for you!
It appeared my e-mail account used for my Fiverr account was not the same as my Paypal email. I have these separate for security reasons. As soon as I changed my Fiverr account e-mail to match the PayPal e-mail, the option to withdraw from PayPal was alive and kicking again.
I have no idea if this is a bug, or if Fiverr has decided to require that both the e-mails are the same and just haven’t gotton around to letting us know yet, but at least it solved the issue for me.
Other users have said their emails match, and they still have this issue. It might be that the update action alone is what fixed it, so maybe you could try that? Just update the email to a different one, then back to the one that matches your Paypal, and see if that works?
Did it work for you?
Edit: added relevant information.