I wonder if this space is explored fully enough at the moment.
Aside from some implementation details, it's conceptually much easier than doing it for a SQL database.
The consumer has access to free and open models for local use.
The supplier has better control and wider market to serve running the models in data centers.
Only way I can see encrypted models being widespread is if they are bundled as part of a software package (OS/Browser/etc) and not sold as the product.
And, the same GPUs are run in datacenter, where there's a big insider risk that vendors want to mitigate with encrypted models (if you're Anthropic and you want AWS to host your models, you don't want 5000 or even 500 or even 50 AWS employees with access to your highly valuable/desirable model weights).
NVIDIA is holding to its pearls like a sloth holding to its branch, because their all business model and livelihood is dependent on that control. I still commend AMD's decision to allow full card enablement with any driver which talks the correct language.
There will be ways for them to segment the market and make their money. Maybe not 100x stock in 5 years but money all the same.
Pay up for license to unlock full capacity, pay up for license to use encrypted models from AI moguls, paid per billion tokens processed or just operations in GPU