Is it possible to use a TXT record for CAA (Certification Authority Authorization)

"Never attribute to malice that which is adequately explained by stupidity."

I would guess that your domain provider didn't purposefully lie to you so much as misunderstand what you were asking for because they didn't know what a CAA record was. They probably saw the word certificate somewhere in the conversation and assumed you were talking about the validation records you might need to create to prove domain ownership.

In any case, no. You can't use a TXT record in place of a CAA record to limit which CAs are allowed to issue certs for your domain.

If you like your domain registrar, you can likely move just the DNS hosting to another provider that supports CAA records. Or if this is the proverbial straw that broke the camel's back, transferring to a different registrar is also an option.