Q: Auto Unlock option not appearing in System Preferences

I'm trying to set up Auto Unlock to automatically unlock my Mac via my Apple Watch.

When I first installed Sierra, I went to System Preferences > Security & Privacy, and under "General" there was an option to turn on Auto Unlock. I turned it on, it asked me to verify my iCloud password, and then told me I had to turn off Two-Step authentication in favor of Two-Factor authentication.

After going from Two-Step to Two-Factor, I returned to System Preferences > Security & Privacy and the "Turn on Auto Unlock" checkbox was gone. It's not showing up any more even after a logout from my machine or a restart.

This is on a 5k iMac, so it should be supported.

Any other ideas? I want to avoid logging out of iCloud and logging back in if possible.