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Encryption plays a crucial role in compliance with data protection regulations by safeguarding sensitive information. Regulations such as GDPR, HIPAA, and CCPA require organizations to take steps to protect personal data from unauthorized access and breaches. By encrypting data, organizations ensure that even if information is intercepted or accessed unlawfully, it remains unreadable without the appropriate decryption keys. This level of security is essential for demonstrating due diligence in data handling practices, meeting regulatory requirements, and building trust with customers and stakeholders.

The other options do not address how encryption is directly related to compliance. Increasing data storage limits does not inherently provide security or compliance benefits. Simplifying user authentication may improve user experience but does not directly protect sensitive information. Enhancing software features can lead to improved performance or capabilities, but it does not relate explicitly to the obligations set forth in data protection regulations regarding the safeguarding of sensitive data.