"without needing additional hardware"
Err, you switched out the smart card reader for a TPM chip.
The TPM chip isn't included in all computer hardware so the TPM chip counts as additional hardware.
I assume "TPM virtual smart card" will not work without a TPM chip.
Good idea but yet another bad andshady implementation from microsoft.
Makes me think microsoft have cut an under the table deal to promote tpm chips.
This idea could work perfectly well without a tpm chip too and be as secure !