I used to use category icons with a transparent background (especially useful when having both light and dark mode versions). Now I always get a white background. I realized that when I download an old icon (that still works) it is PNG. But when I download the newly uploaded (PNG) icon, it downloads as JPEG.
I would consider this a bug as I think it makes no sense to convert those icons to JPEG. I have full control over what I am uploading, unlike in forum posts where I can imagine it can be useful.
EDIT: This worked Problem with category image transparency. I did not find it at first. But what has changed recently? My png_to_jpg setting was on 95, so changed to 100 and it started working. But why now?
It looks like your issue is solved but I took a quick look into this anyway.
From looking at the code the png is converted to a jpg (which doesn’t support transparency) if the site setting value for png_to_jpg_quality is less than 100. I agree that there is room to improve the usability around these settings as it could be more intuitive.
The easiest solution is to keep the site setting at 100 to prevent any image conversion.
There are a couple of other pitfalls too, if the image was pasted or if the png dimensions are very large (ie. greater than 1280 * 720). In both scenarios it will be converted to a jpg too.