Same issue, And this only happens on WatchOS10 whether it is an simulator or a physical device

Haven't solved this problem yet, Is this forum where Apple engineers can be found? I think Apple's engineers should pay attention to this problem

I have asked for DTS, and Apple replied me with this: I recommend that you remove and re-enable the capability, regardless of what you see in the entitlements plist. It’s not sufficient to verify the entitlements file as shown in your Xcode project, nor in the built IPA after you’ve archived your app. Because your app is re-signed as part of the App Store Connect upload process, it’s difficult to know whether that upload actually contains the correct entitlement file. It doesn't help

I met the same problem, and I run my Xcode on rosetta. It's so so so so so annoying, any solution would be appreciated