For on-premises versions of Microsoft Dynamics CRM 2013, data encryption is not active by default for new or upgraded organizations. However, data encryption may be activated at any time.
Any Microsoft Dynamics CRM users who have the system administrator security role can activate data encryption.
S/He can do so by navigating to :
Settings -> Data Management -> Data Encryption area.
Please Note : After you activate data encryption, you cannot turn it off.
Now the Issue :
In my test or demo environment my Microsoft Dynamics CRM website is not configured for HTTPS/SSL so the Data Encryption dialog box will not be displayed.
For the test/demo/dev environment I can disable the SSL check for encryption by modifying DeploymentProperties table in configuration database.
please remember any direct modification in the database is strictly prohibited so we would not recommend you to do that in your production environment
open the configuration database (MSCRM_CONFIG), and in the DeploymentProperties table, set DisableSSLCheckForEncryption to 1.
update DeploymentProperties set BitColumn = 1 where ColumnName = 'DisableSSLCheckForEncryption'
even after this modification the chances are that when you try to activate the encryption you will hit an error
"Please select an account that is a member of the PrivUserGroup security group and try again".
the catch here is, if the account you are using to activate the encryption is not part of the PrivUserGroup , then you will face this error.
So you need to go to the AD and add the user into the PrivUserGroup group.
And You'll be able to activate the encryption.
Happy xRM Development.