Oh that’s great news, well at least there’s an easy way around it.
The usb to toslink isn’t very expensive but it does leave a nasty mess of cabling on my desk. The audio is great though. The details have been mentioned in a couple topics here in the past, starting I think a bit less than three years ago.
WH
FWIW, I gave up on the Phonak and went back to a Starkey ITC aid.
Of course, the new Starkey Genesis Al 24 uses a new (dumbed down) app and they changed the way they stream, so I can get full mute, but now dealing with BTLE connectivity and disconnects. Fortunately, I will be upgraded to the new Signature series when they hit Canada this month, which Starkey tells me has MUCH better Bluetooth connectivity and circuitry 
But that is for a new post 
Do you have Audio Lumity? L90?
I can confirm they completely mute. Whatever you are hearing is your natural hearing, combined with the possibility that the movement and the hearing aids are creating wind noise and you are picking that up with your natural hearing.
Just to confirm, the mute checkbox in Target is checked?