vSphere 8.0u3e (see release notes) fixes the issue where a rekeyed VM may experience an unexpected reboot:

PR 3477772: Encrypted virtual machines with active Change Block Tracking (CBT) might intermittently power off after a rekey operation

Due to a race condition between the VMX and hostd services for a specific VMcrypt-related reconfiguration, encrypted VMs with active CBT might unexpectedly power off during a rekey operation.

This issue is resolved in this release.

From what I can tell, this issue is not currently fixed in the vSphere 7 stream.