Perhaps a clue to this mystery……..at least one bank allows you to have an IRA HYS account which suggests it is not forbidden.
One bank that does not allow it said it because is a “transactional” account at their bank while an IRA money market (at their bank) is not.
I got the impression that this was not by design but by default…..that
if they allowed an IRA HYS account the owner could do online transactions at will (even externally) and they did not want to allow that but the computer system was not designed to forbid that so they did it administratively by not allowing IRA owners to have an IRA HYS.
Why the IRA money market acct did not have that problem and why they couldn’t have the same restrictions on the HYS I don’t understand.