In which of the following encryption techniques does the encryption engine run on a secure machine that handles all the cryptographic actions?

The proxy-based encryption technique is characterized by the encryption engine operating on a secure machine that manages all cryptographic actions. In this setup, data is sent to the proxy server, where it is encrypted or decrypted before being transmitted to its destination. This separation of the encryption process from the data source enhances security since the encryption engine is isolated from the client system and can be specially secured against various threats.

Using a proxy server for encryption ensures that sensitive data is not exposed during transit and can provide centralized control over encryption policies and practices, allowing for more effective audits and compliance oversight. This architecture also helps in scaling the encryption capabilities without burdening the client devices directly, which is especially important in environments with numerous endpoints.

In contrast, instance-based, file-level, and application-level encryption involve different mechanisms where the cryptographic processes are integrated directly into the system architecture, either at the instance of virtual machines, the file level itself, or the application layer, which does not typically isolate the cryptographic actions to a dedicated secure machine.