ZFS: Keyformat required for new encryption root

I am trying to create a filesystem in ZFS with the following command: zfs create -o compression=on -o recordsize=1M -o encryption=on pool/dataset I am unable to do so, since I receive the following error: cannot create 'pool/dataset': Keyformat required for new encryption root. There are 3 results for this in Google, none of them are particularly helpful. What am I doing wrong here?