Hello
I am Prakash and I will be glad to assist you today with your question.
Please check which Office subscription you are using as it may be due to licensing.
Office 365 Enterprise E3 licenses include Microsoft 365 Message Encryption. Additionally, only customers of Microsoft 365 Apps for Enterprise who also use Exchange Online are allowed to access the Encrypt-Only capability, which is the option located under the Encrypt button.
In case of additional questions, reach out back to us, and we will be happy to help and try our best to resolve your issue.
Best Regards, Prakash