This is the major reason Yuzu's developers were sued by Nintendo. The lawsuit barely touched on the emulation aspect, as emulation itself is legal as long as it's developed using clean room techniques. Instead, the lawsuit's focus was that:

• The developers were making a lot of money off it. IIRC their Patreon received several thousand dollars per month.
• They ran pirated games themselves, demonstrated by them posting screenshots of a leaked build of Tears of the Kingdom running in Yuzu (obviously pirated as there was no official release yet)
• They helped users extract the encryption key from their Switch consoles - this is the part that actually violates DMCA

There was some discussion about Yuzu being able to decrypt games given the encryption key, as bypassing encryption violates the DMCA. That's easily avoidable by requiring users to provide decrypted ROMs, and not providing decryption instructions (users have to figure it out themselves). This was the approach taken by 3DS emulators for example.