VM Backup makes use of AES-256 encryption. Encryption for primary backups is only available for the Unlimited / Unlimited Plus / Subscription licensing models and can be enabled in the [Advanced Settings] tab in VM Backup.

Offsite copies will always have Encryption enabled. This is by design and cannot be disabled as it ensures that all data sent offsite, both when drive swapping and when transferring data over a VPN/WAN/Internet connection - will be secured with the highest level of encryption.

VM Backup will require the encryption key upon restoring, so it's critical that you either remember it or take note of it in a secure password manager as there is no method of recovery for the master encryption key.