The Blockstream support team replied back to me and it's not a bug. They made it that way on purpose.

They say it's a security design. PIN-based logins take advantage of Blockstream's blind oracle security model. Essentially, it's a remote server. When you use PIN logins, the application communicates with the blind oracle that holds a piece of your wallet's encryption key and retrieves that piece of data. The combination of the two is needed to unlock your wallet. They say that this design prevents someone from accessing your wallet and stealing from your app by just knowing your PIN and having physical access to your phone.

But if you use biometric logins, then the encryption and decryption takes place in your device's operating system. It doesn't require access to the blind oracle to retrieve a part of the encryption key. Everything is done locally on the device. That's also why you can generate a seed when offline.