live-build/share/hooks/normal/1010-enable-cryptsetup.hook.chroot
currently adds the line 'CRYPTSETUP=y' to
/etc/cryptsetup-initramfs/conf-hook during the live system build
process. This conf-hook file does not document any such option, and
when grepping through the entire cryptsetup codebase for the string
'CRYPTSETUP', I didn't see any indicator that it was used as a
configuration variable. I commented the relevant section of code out,
then made a very basic Debian Sid live ISO with
--debian-installer=live, and was able to install Debian from it with
encrypted LVM without issues (this installation also booted properly
thereafter).

I don't think this modification is needed anymore. If it is truly
obsolete, it would be preferable to remove it, since having
live-build edit files owned by other packages is hacky, and results in
notices about those modified files in the output of `debsums` and
`dpkg -V`.