It actually does in the upstream dev builds https://gitlab.steamos.cloud/holo/dirlock/-/wikis/Enabling-d...

It’s not in a consumer friendly state yet, but I’ve been using my steamdeck with encryption for a month now with zero issues. I guess technically this is not “full” disk encryption since it’s just the home dir, but I only care about protecting my personal info which is all in the home dir anyway.