Wasp's SMTP service is not capable of responding to two-factor authentication prompts for emailing. When using Office 365, here is guidance from Microsoft on how to get this to work:
Microsoft has made an acccommodation for applications like this.
First connect to Office 365 Powershell:
Set the AllowLegacyClient option to true, then use smtp-legacy.office365.com SMTP endpoint instead of the default