One reason I never proceeded with one in the late 70’s. Thought about it before the PC, actually for the Mainframes and remote terminals connected by PTP modems. Leased lines as Telecom called them.
It has to be decoded at some point.
If I wanted to get your key logs in safeclient, and the OS sees encrypted key strokes, then I would have the malware infect the client as it loads and grab it once its decrypted. That way no one knows, fingerprint or not.
If somehow the client detected the malware then the malware could simply sandbox the client when you run it and then inspect the correct memory locations to get the decrypted keys.
It makes one wonder if encryption would be worth it. No, if that is how you are doing it.
The only way I could see it working is if the keyboard encrypted it and only the nodes decrypted it, not the s/w on your machine. BUT then you still have the issue that if your PC has malware then it can compromise you in so many ways. It is best to always play SAFE sex opps sorry safe PCing and also check your system for malware regularly
A better system, but still not ideal/useful, is to have a challenge/response device you carry that can provide a crypto response back to the nodes to a challenge by the nodes for your ID and you supply only the password. That way any keylogger does not know the ID, cannot create the correct response to a challenge once your device is removed, and only knows a password. Still it is FAR better to keep your system clean.