It is not a problem with encrypted data. It is a good analogy with a safe or a diary written in some given code..
The police can get a warrant for the contents of your safe, but they can't force you to open it. They can hire a safe-cracker, but if they can't find one that can break in to your safe, you still don't have to give up the combination and the cops are out of luck.
Encrypted data is the same. They can't force you to give them the passphrase but they can hire someone to try and crack it. If no one can, the cops are out of luck.
What if I had a paper diary and I wrote it in my own language(encryption)? The cops can get a warrant for it and hire analysts to try to decipher my language and if no one can, the cops are out of luck. They can't compel me to translate it to English.
I don't see how you have a problem with any of this.