I have set up Microsoft Entra for my AD and configured all correctly with "Web" trust system (not "ION").
Then I have followed a simple sample from "Azure-Samples" GitHub at https://github.com/Azure-Samples/active-directory-verifiable-credentials-dotnet (the first one).
All goes great and my did.json and other files are identified well, nevertheless my verified credential has always a subject from "ION", see the following screenshot:
I'm currently using Microsoft Authenticator and I have been investigating though code in both entra mobile libraries (iOS and Android) and I do not see any alternative...
Could be a possible restriction for MS Entra Verified IDs or it is more a wallet related problem?
This is as expected. The Microsoft Authenticator and the Microsoft Entra Wallet Library uses did:ion long form for its did and that is what you are seeing as the subject.