They can't not "Throw in the towel", as you put it.
They can't maintain anything if all payment is cut off. No devs can make money from it if all payment is cut off. Nothing can be sold if all payment is cut off.
Itch simply doesn't have the funds to take a strong stand here. Especially not on their own.
The only real fix is for the whole system around payment processors to be completely redone. Make it a public, nationalized utility.
And, of course, shut down puritanical cults like collective shout.