Tested successfully on hirsute using 2:12.0.0-0ubuntu2 . I created an encrypted volume and attached it to a VM.


cinder type-create LUKS
cinder encryption-type-create --cipher aes-xts-plain64 --key_size 512 --control_location front-end LUKS nova.volume.encryptors.luks.LuksEncryptor
cinder create --volume-type LUKS --poll --name testvol 1
openstack keypair show guests || openstack keypair create --public-key  ~/.ssh/id_rsa_guests.pub guests
openstack flavor create --id 8 --ram 1024 --disk 8 --vcpus 1 --public m1.ly
openstack server create --image bionic --flavor m1.ly --network private --key-name guests --wait test3
openstack floating ip create ext_net
openstack server add floating ip test3 172.20.0.207
openstack server add volume --device /dev/vdb test3 testvol
cinder list
+--------------------------------------+--------+---------+------+-------------+----------+--------------------------------------+
| ID                                   | Status | Name    | Size | Volume Type | Bootable | Attached to                          |
+--------------------------------------+--------+---------+------+-------------+----------+--------------------------------------+
| 67564b48-54b7-47bf-ac95-d701b455cb7d | in-use | testvol | 1    | LUKS        | false    | 6c43fed1-a195-47d8-b5a9-dc7fd166bf58 |
+--------------------------------------+--------+---------+------+-------------+----------+--------------------------------------+

cinder show testvol
+--------------------------------+------------------------------------------+
| Property                       | Value                                    |
+--------------------------------+------------------------------------------+
| attached_servers               | ['6c43fed1-a195-47d8-b5a9-dc7fd166bf58'] |
| attachment_ids                 | ['f0c3ed24-2973-407a-b6f6-afcef999ed43'] |
| availability_zone              | nova                                     |
| bootable                       | false                                    |
| cluster_name                   | None                                     |
| consistencygroup_id            | None                                     |
| created_at                     | 2021-11-01T16:38:32.000000               |
| description                    | None                                     |
| encrypted                      | True                                     |
| encryption_key_id              | c6079e38-fe86-4e16-aee0-09d07fdfc719     |
| group_id                       | None                                     |
| id                             | 67564b48-54b7-47bf-ac95-d701b455cb7d     |
| metadata                       |                                          |
| migration_status               | None                                     |
| multiattach                    | False                                    |
| name                           | testvol                                  |
| os-vol-host-attr:host          | juju-86a900-zaza-c440171f601b-11@LVM#LVM |
| os-vol-mig-status-attr:migstat | None                                     |
| os-vol-mig-status-attr:name_id | None                                     |
| os-vol-tenant-attr:tenant_id   | 6485c947c61046c99b88e8f5f3bcae9a         |
| provider_id                    | None                                     |
| replication_status             | None                                     |
| service_uuid                   | 5a4cf232-59a0-4cd9-8d3f-badd74e9a5e8     |
| shared_targets                 | False                                    |
| size                           | 1                                        |
| snapshot_id                    | None                                     |
| source_volid                   | None                                     |
| status                         | in-use                                   |
| updated_at                     | 2021-11-01T17:27:36.000000               |
| user_id                        | d16ea8b7d0d542d8b2f36f6a121434bc         |
| volume_type                    | LUKS                                     |
| volume_type_id                 | 2bfe04b8-3e70-412f-a348-f6f5ff359991     |
+--------------------------------+------------------------------------------+