Distributed storage pitches always lead with encryption at rest, which is the easy half and the half nobody was worried about. The parts that decide whether regulated data can go anywhere near it are custody and deletion. Custody: who holds the key material, what happens when a node operator is compelled to hand something over, and whether the provider is technically able to comply even if they promise not to. A provider that cannot decrypt your data is making a far stronger statement than one that undertakes not to, and both get described with the same marketing sentence. Deletion: in a replicated system, delete is a request rather than an event. Erasure coding and geographic replication are precisely the properties that make a hard delete difficult to demonstrate. Destroying the key and treating the ciphertext as dead is a defensible answer, but it is one a compliance reviewer has to accept explicitly, and I would rather discover their position at design time than during an audit.