Yes, it's fine, with normal supervision levels.
Not having the blanket in the crib is to minimise the risk of SIDS - Sudden Infant Death Syndrome, when babies die in their sleep for no apparent reason (pretty scary, yeah). There are safe sleep guidelines:
- put the baby to sleep on its back on a firm mattress
- use a baby sleeping bag, or tuck any sheets or blankets in firmly (some say not have sheets or blankets at all, besides a fitted sheet)
- no loose toys or blankets, or anything else, in the cot
- make sure the baby/room is not too hot
Breastfeeding, and a non-smoking environment, also reduce the risk of SIDS
More info here:
https://safetosleep.nichd.nih.gov/safesleepbasics/risk/reduce
https://rednose.org.au/article/red-nose-six-safe-sleep-recommendations