The policy files must be downloaded manually and installed in your Java lib/security folder replacing the old files. (DO NOT KEEP THE OLD FILES. Keeping both will invalidate the install. Replace the old ones.)

Java6: http://www.oracle.com/technetwork/java/javase/downloads/jce-6-download-429243.html
Java7: http://www.oracle.com/technetwork/java/javase/downloads/jce-7-download-432124.html
Java8: http://www.oracle.com/technetwork/java/javase/downloads/jce8-download-2133166.html
You may also search google for: 'java unlimited cryptography policy files'

OS X Java 6 install location:

/System/Library/Frameworks/JavaVM.framework/Versions/CurrentJDK/Home/lib/security/

/Library/Internet Plug-Ins/JavaAppletPlugin.plugin/Contents/Home/lib/security/

C:\Program Files\Java\jre8\lib\security\

CrushFTP must be restarted after making this change. (The service or daemon.) You can use the CrushFTP app to stop the daemon, and start the daemon.

Once this has been done, edit the cipher list in the server prefs SSH port item, SSH tab to duplicate the AES128 ciphers and replace the 128 with 256. Your Encryption, SSL tab items will automatically include the new items. Stronger key and keystore files will now work properly too. You will now be secure using strong cryptography instead of the weakened default policy that ships with Java due to 1990's bureaucracy.

attachments
The updated files will resolve PGP decryption issues, outbound SFTP/FTPES/HTTPS/SMTP connection issues to servers requiring strong cryptography, etc. Anything requiring strong cryptography will now work!