Is there any configuration in rancher 2 provider for at rest data encryption for etcd?

It depends on what distro you’re deploying. RKE2 natively encrypts Secrets, to there isn’t anything you have to do there. For K3s, you can use

secrets-encryption: true

in machine_global_config. For RKE, there is a

secrets_encryption_config

as a kube_api server argument.