This part of the regs have nothing to do with encryption. This is the so called "documented protocol" requirement. §97.113(4) is the relevant main rule that would govern encryption. There are various exceptions to this through the rest of the document such as spread spectrum, space stations, and telemetry/radio control all having some special case language.

Well, I stand corrected. I had admittedly just googled it myself. I had known the ban on encryption was pretty accepted in the amateur radio community. Thanks for the correction.