Our engineering team is currently aware of this use-case and they are working to implement this functionality for the future. At the moment, we do not have an ETA for when it will be available.
So the workaround for me is either to force user password reset or to switch to one of supported algorithms (for example sha-256), am I missing something?
For now, yes, this are the only options available. The feature is currently being tracked through an internal ticket REQ-10410 and is actively worked upon.
Once the feature will be released, you will be able to find out more details about it in our Okta Release Notes.