In your Shopify Payment Settings, check the status of your connection to PayPal.

Shopify ➡ Settings ➡ Payments

This will most likely be in the section called Additional Payment Methods

If the status of PayPal is "setup incomplete" OR "inactive", this affects which payment methods your customers can pay with.

I recommend completing your PayPal setup, and Shopify will allow your customers to pay with PayPal for subscriptions.

If PayPal is your Primary payment gateway, you can also easily see the STATUS.

If the status is "setup incomplete" OR "inactive", you will need to complete the setup to accept this as a form of payment for subscriptions.