Which version of QGIS you are on? Are you using by any change Advanced Digitizing? Newer version has been experiencing a bug where on the fly reprojection is not done so all of the layers need to be in the same projection for it to work.
Here is the reference link, it mentions WGS84 but it may be the cause for you Advanced digitizing works wrong with Snapping · Issue #46352 · qgis/QGIS (github.com)