From the still little information that we got ... yeah.
Sonic's just watching. It is us the viewers that became Chao in the another universe.
As for me ... the question is ..
Are Chao considered as mammals or reptiles?
As far as I know ... Echidnas and the platypus are the only living mammals that lay eggs.
Chao are... I'm going to say "invertebrates".
Sonic Frontiers confirm the Ancients evolved (if you call it evolution) into chao. The Ancients don't appear to have a skeleton. We don't know if the Ancients possess the same water-powers as Chaos or if they have a jellyfish membrane.
While the fact chao have teeth may suggest they have skeletons, we know some invertebrates have teeth-like structures, such as the worm genus Ancylostoma.
So I would say chao are ever invertebrate, or belong in a unique classification from the animal kingdom.