They're crapping themselves because somebody has just released [1] a cartridge that lets you run "backups" stored on a SD card on an actual physical switch.
Each cart has a unique key though, so I imagine Nintendo will go on a big banning spree.
They can only ban you if they find 2 copies of the same cart running at the same time. This hardware, for all intents and purposes, looks to the Switch like a physical cartridge.
Each cart has a unique key though, so I imagine Nintendo will go on a big banning spree.
[1] https://migswitch.com/