Because they're claiming that they have the right to extract information that (allegedly, not even certainly) exists inside the defendant's head, i.e. to force

Because they're claiming that they have the right to extract information that (allegedly, not even certainly) exists inside the defendant's head, i.e. to force a testimony. There's a very obvious difference between saying "We're allowed to look inside your documents and records" and "We're allowed to force you to give up any fact we claim you know on pain of contempt charges". Even worse is the fact that people might not actually remember encryption keys (it's happened to me several times), which would mean you could be kept in jail indefinitely for forgetting the password to some trivial volume. I know I've used Truecrypt to keep copies of business receipts and subsequently forgotten the password years later; imagine if the government had erroneously accused me of having illegal materials in that encrypted volume.