Yeah, I'm very confused. It's not possible to encrypt env vars that the program needs; even if it's encrypted at rest, it needs to be decrypted anyway before starting the program. Env vars are injected as plain text. This is just how this works, nothing to do with Vercel.
This situation could some day improve with fully homomorphic encryption (so the server operates with encrypted data without ever decrypting it), but that would have very high overhead for the entire program. It's not realistic (yet)
Oops - you said the opposite of what I read, my mistake.
PoC or GTFO.
I think you'll find it's a bit harder to do than you expect.