Joplin can encrypt and it is selfhostable and uses Markdown

Benefit: apps for every platform

If you are dealing with compliance seek help from a professional

if you're encrypting at rest you also have to consider where there encryption key is being stored.

if you're storing the encryption key plaintext on the same drive as the data, there's not much of a point in encrypting.

a TPM/HSM could solve the issue, depending on how far down the rabbit hole you need to go.

EDIT: You could also encrypt the disk of the VM/Server hosting the app. similar situation.

You can selfhost Standard Notes. The notes are encrypted client side before they reach the server.

joplin

Recently I stumbled upon nb

If you are storing manly on one device and are looking for a relatively "simple" solution for encryption at rest I would suggest to just encrypt the folder/directory/image the data are living in.

Of course, this way you have to decrypt the data while you are using it. However, it separates the responsibility from the note taking app.

This may or may not be a good solution for your use case, but it should be fast and easy to implement.

I used to do this with some mildly sensitive data using a mac encrypted disk image with plain markdowns files inside. I accessed the files with vscode, but I don't see why it wouldn't work with Obsidian. It may just be a bit of a hassle to open the vault each time.

TriliumNext

If you like the command line you could consider jrnl

https://jrnl.sh/en/stable/

Maybe Anytype? It kind of fits the description. It's still in beta though.