It seems like some of the issues with the smart card reader were addressed in recent releases. If you have the latest 10.3.7 version you should also be able to disable smart card redirection.
ClientSettings.DisableSmartcardRedirection
https://learn.microsoft.com/en-us/windows-server/remote/remote-desktop-services/clients/mac-whatsnew
I am uncertain about that error but am asking the product team about it.