Could you send me a video showing it?
Send it to my email: [email protected]

I have no idea what is going on, i never had such problem, nobody reported similar bug.
Maybe video would give me some ideas...

As a workaround you can open Photos app, and send Photo to Artstudio.
Or use drag and drop.
Or copy to clipboard in Photos, and tap File->New->New From Clipboard in Artstudio.

update: it will be added in 1.0.7

Added Help sections on iOS, small improvements and bug fixes

both versions:
- added 'Taper' brush - similar to default brush in old Artstudio
- fixed wrong 1st frame in Screen Recording
- fixed Crop Layer To Image Bounds in some cases
- fixed Pick and Move mode in Move tool
- moving a selection is now possible only in 'New' mode (not possible in 'Add', 'Subtract' , 'Intersect')
- fixed Crop and Ellipse/Rect select tool when trying to select area out of image bounds
- changed order of buttons in export view - now PNG is the first from left
- few other small fixes and improvements

iOS version
- added 'Get Started' and 'FAQ' sections - available in Artstudio submenu list
- added separate option in Artstudio->Preferences for Eyedropper Delay when using Pencil
- fixed Polygon Lasso in Pencil Only mode - now if line was started using Pencil it can be continuead only with Pencil
- now 'Open Documents' popover is automatically hidden after closing all documents

macOS version:
- now Rename Group popup is correctly dismissed

Here I'm starting to publish all brushes from the old Artstudio app.
The first pack is Splats

It will be improved in a bit different way - cropping area will be limited to image bounds when adding the area. It can then extend outside image bounds when editing it.

To make sure it uses only visible part of the layer, tap Layer->Crop->Crop To Image Bounds

Try this:
http://osxdaily.com/2017/10/05/refresh-updates-app-store-ios/