Registering devices with Intune for management and policy enforcement
Yes, this error is usually caused by a policy in the tenant.
It can come from Conditional Access, the FIDO2 authentication method settings, or the device settings that control whether security keys can be registered.
You should confirm that FIDO2 is enabled for your user under Authentication methods --> FIDO2 Security Key, and that security key registration is allowed under Devices --> Device settings. If either of those is restricted, the key will fail during registration.
The correlation ID helps identify the exact block, and it’s not a known issue with the YubiKey NFC Type-A.
The usual fix is checking those three areas for any restrictions and then trying the registration again once the policy conflict is resolved.