The .io domain extension shouldn't be invalid by any means. I own a few domains with this extension and they're setup + working on DigitalOcean as I write this post.
I did just test to see if an error would pop up when adding another. I chose a domain that isn't actually setup, mytest.io, and it was added without any issues.
If you're unable to add a domain through the control panel, I would recommend submitting a support ticket and let them know of the issue so they can see if there's details that they can provide you with.
