Oh yes, but unfortunately the physical passport is enshrined in a ton of treaties that are very hard and slow to change.

There are also some nasty privacy and autonomy implications to digitizing the passport system.

This is not primarily a technical problem, but that doesn't mean it's not a very hard problem. Tech people tend to assume that every non-technical problem is easy. Often people, legal, ethical, and institutional problems are quite a bit harder than just making shit work at the tech level, and it is not just because people are lazy or inept. It's because there are loads of competing concerns and stakeholders.

Non technical problems are the worst. The type of problem would probably take tens or hundreds of billions of dollars in manpower to fix. The amount of meetings and negotiations is probably staggering