iPadOS 15.5 beta 3 incompatible Apple Pencil 2

I am also experiencing this issue. I am not on beta 3, but on the release version of iPadOS 15.5 on my iPad Pro 12.9 M1. Nothing seems to work, I also tried restarting, reconnecting with bluetooth and forgetting the Apple Pencil 2, but it does not work anymore right after the update to iPadOS 15.5. The only thing that happens is a small popup with "Apple Pencil" when I place the Pencil on the magnetic charging pad on the side. So it is there (and not broken), but normally it also displays the battery charge percentage when you do this, so it is not connected with bluetooth. I talked to Apple Support and they sent me to the Apple Store to have it checked out. But reading from experience here; this must be a software bug. This needs to be fixed ASAP as I am an artist and I need my Apple Pencil to do my work.

I had the same problem on 15.5 (non-beta) upgraded to 15.6 and it is still not working, same behavior (apple pencil pop up but not pairing)