Most altimeters have that range historically, I don't know the exact histrory. Also some airport weather equipment can't measure above it either.

There is a potential safety issue. The actual altitude won't be correct with pressure above the altimeter's barometric pressure range. Moreover, though, with not every aircraft using the correct or the same barometer setting, aircraft can't rely on reported altitudes for safe separation. So even if a given aircraft's altimeter can be set above that range, the same can't be assumed of everyone else flying in that area.

In the US, the FAA implemented procedures for such situations some years ago. I'd have to go back and look up the particulars but IIRC VFR flights can occur with specific procedures, but IFR operations are either not approved or severely limited.