One of the features that has been missing from Azure gov cloud is encryption at host. The restriction of dm-crypt specific to certain Linux operating systems and the cpu overhead using bitlocker makes this a big win, not to forget federal compliances you are trying to achieve. It feels like it is some kept secret and I am not sure why? You still need to access the portal with a special link just to provision with it enabled in commercial cloud. No bicep/arm template examples and a lot of the documentation seems to be from 3rd party blogs. Well, look no further!
I published a quick arm template that enables encryption at host, but before we deploy, we need to make sure the feature is enabled. Check if it is enabled by running Get-AzProviderFeature -FeatureName "EncryptionAtHost" -ProviderNamespace "Microsoft.Compute"
and if it is not registered, register it by running Register-AzProviderFeature -FeatureName "EncryptionAtHost" -ProviderNamespace "Microsoft.Compute"
Once the feature has been registered, you can create a VM using this link for gov cloud https://portal.azure.us/?feature.enabledoubleencryption=true&feature.enablehostbasedencryption=true When you get to the disk section, there will be an option to enable encryption at host.

Using an ARM template is as easy as adding a securityProfile with encryptionAtHost set to true
"securityProfile": { "encryptionAtHost": true },
For a complete sample, please go here https://raw.githubusercontent.com/jrudley/vmencathost/main/azuredeploy.json
I haven’t seen any announcements for encryption at host for gov cloud, but then again, I don’t see many for gov cloud to begin with. Hopefully, this makes your FedRAMP and CMMC journey a little easier 🙂