Explanation
No matter what kind of application, system, or hosting model used, encryption is 100 percent dependent on encryption keys. Properly securing the keys and the exchange of them is the biggest and most important challenge of encryption systems.

Application virtualization is a software implementation that allows applications and programs to run in an isolated environment rather than directly interacting with the operating system. Sandboxing refers to segregating information or processes for security or testing purposes, but it's not directly related to isolation from the underlying operating system. Abstracting sounds similar to the correct term but is not pertinent to the question, and hosting is provided as an erroneous answer.

Explanation
Signed into law and effective starting on September 1, 2015, Russian Law 526-FZ establishes that any collecting, storing, or processing of personal information or data on Russian citizens must be done from systems and databases that are physically located with the Russian Federation.

Portability is the ability for a cloud customer to easily move their systems, services, and applications among different cloud providers. By avoiding reliance on proprietary APIs and other vendor-specific cloud features, an organization can maintain flexibility to move among the various cloud providers with greater ease.
Reversibility refers to the ability for a cloud customer to quickly and easy remove all their services and data from a cloud provider. Interoperability is the ability to reuse services and components for other applications and uses. Scalability refers to the ability of a cloud environment to add or remove resources to meet current demands.