Unfortunately, policy v2 was introduced in newer version of fscrypt than
currently available in focal [1].

I've had a similar issue to yours during snap refresh. I remember I had
to logout the user and run something similar to

sudo fscrypt purge "$(findmnt -n -o TARGET --target /home/<user>)" --user <user>
sudo fscrypt unlock /home/<user> --user root
sudo snap refresh

from a second user which was NOT using home encryption.

[1] https://github.com/google/fscrypt/releases/tag/v0.2.6

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https://bugs.launchpad.net/bugs/1867426

Title:
  ~/snap and fscrypt

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