A general runtime error occurred. Key provider NKP is not compatible with the host . Reason: "The host does not support Native Key Provider because it is not in a cluster

 Error:

While creating a VM on encrypted datastore as:

A general runtime error occurred. Key provider NKP is not compatible with the host . Reason: "The host does not support Native Key Provider because it is not in a cluster 

Solution:

Move the ESXi host to a cluster and re-try the operation