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It appears it cannot run unsigned code, as it doesn’t have a menu. This is probably similar to the Sky3DS. It behaves like a real cartridge, so it would only run pirated cartridges. No DLC or homebrew.
Don’t cartridges have unique IDs though? They could just start disabling cartridges by ID and banning any accounts that run them.
So like how they tried and failed to stop Tengen back in the day with their unlicensed NES carts?