I suspect that this happens because of the CheckVersion signed extension: https://substrate.dev/rustdocs/master/src/frame_system/lib.rs.html#1532. Still exploring this.

Originally posted by @NunoAlexandre in #452 (comment)

Problem

The CheckVersion signed extension requires the spec_version of the client's runtime to match the spec_version of the runtime of the node it connects to. If they don't match, all transactions submitted by the client are rejected.

This behaviour goes against our goal to be as compatible as technically possible between the client (runtime) and the node (runtime).

Solution

I would just drop the usage of CheckVersion and later implement a similar signed extension that checks whether the two versions are compatible, something we still need to figure out how to do.