Comment 17 for bug 434232

AFAIK, The reason is that upstart never wait for a task to end before starting another one, unless a task depend on the first task. No task depends on cryptsetup and actually no task should depend on it. However, many tasks depend on root filesystem and won't start until filesystem gets available. That is why cryptsetup prompt only works when root filesystem depends on cryptsetup.

Therefore the best way to handle this at the moment is really throught initramfs as once the system starts to boot, cryptsetup can't have the power to stop the computer from booting. If xsplash is about to have that functionnality, a potential fix would be to ask the passphrase through xsplash like it did in the past with usplash, at the exception that xsplash would need to hide gdm or prevent the login screen to appear until user answered the prompt.