I have changed my Register Action Method to accept user Name instead of Email.
if (ModelState.IsValid)
{
var user = new ApplicationUser
So cloudikka's answer had it right. I'll just add explicitly (cloudikka's link explained it as well) that you need to list ALL the characters you want to allow (not just the whitespace or special characters), like this:
services.AddIdentity(options => {
options.User.AllowedUserNameCharacters = "abcdefghijklmnopqrstuvwxyzABCDEFGHIJKLMNOPQRSTUVWXYZ0123456789-._@+/ ";
});
and NOT this options.User.AllowedUserNameCharacters = " ";
which means 'only whitespace characters allowed'. (I reckon this was Babar's problem.)