Yes, you can. You could even boot from a SD card if you wanted to.
The problem being that SD cards, even the fastest ones, are much slower than modern SSDs. Even more problematic, SD cards are a lot more expensive as well.
But....
If I needed extra storage, but didn't have the money to purchase something, and I had a SD card sitting around, it wouldn't hurt anything.
Some people say that SD cards are unreliable, but I never had any issues with them.
There could be an issue with the lack of TRIM, which could slow the SD card over time.
There are faster SD cards, 1000MBps+ speeds, just not that fast on the MBPs.
The OP's M1 MBP has the same reader that has been around since I think the 2012 Macs (UHS-II), which only does up to 312MBps
@Half duplex or 156MBps
@FuLL duplex.
312MBps isn't bad, especially for a general storage option. For booting, I would suspect that it would probably be running half speed
@FuLL duplex, so losing significant performance.
Still, I have a few Macs with old SSDs that get slower speeds than that, and they feel fine to me as boot drives. If I was transferring a lot of data regularly, I would (and do) use something faster.