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I have been having this issue on the M1 as well. I've deleted all of my simulators and re-created them, I've renamed my Xcode (I have four versions installed) back to the default name, etc. Nothing allows me to sync my clipboard from macOS to the simulator. The paste menu items are disabled.
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Admin accounts work and Xcode 11.2 works. We are going to try building new provisions for build on an admin account and moving them to the developer's machine to see if this workaround works.