Signups not allowed for otp

I'm trying to enable phone auth for our users. Currently, users sign up with email/password. Since we also verify their phone numbers, I want to go back and attach phone numbers to these users so they can sign in with OTP.

I set the auth user's phone and phone_confirmed option to true. However, I'm still getting "Signups not allowed for OTP" when trying to login with the phone number attached to the auth user.

Attaching phone and confirming:
const { data, error } = await supabase.auth.admin.updateUserById(
    userId,
    { phone, phone_confirm: true }
  );


Just Confirming:
const { data, error } = await supabase.auth.admin.updateUserById(
    userId,
    { phone_confirm: true }
  );


Auth log shows:
``/otp | 422: Signups not allowed for otp
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