vSphere by default uses certificates to communicate between various infrastructure components - and by that traffic is encrypted already - see
See the "Server Configuration Guide", Chapter 11, page 227
"Encryption and Security Certificates for ESX Server."
VM traffic requires an external KMS server where encryption keys are stored. an external component
https://www.starwindsoftware.com/blog/encryption-of-vmware-vsphere-6-5-virtual-machines-and-vmotion-migrations-and-their-performance
Even though VMs can be encrypted on storage using a KMS, this does NOT encrypt the VM network traffic. It only encrypts the files on the data store.
Also, the vSphere Client traffic has always been encrypted using HTTPS. Look at any Hands On Lab at the vSphere Client client URL for proof. HTTP is unencrypted and HTTPS is encrypted.
Both VMotion & SNMPv3 traffic can be encrypted.
I agree with duke, VM traffic can't be encrypted natively by vSphere
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