As a comment, I do not see why calling an encryption method in the application, then inserting encrypted data into the database wouldn't work. Just make sure you using the same method for encrypting/decrypting the data.

I have one system encrypting the data and a second system decrypting the data. This explanation may require more than one comment so...

The database has an exposed web service for registering customers. The client provides a couple of identifiers. The database validates them and generates a "key". This "key" is passed back to the client through said web service.

The client stores this key locally. The client must be able to decrypt this key and validate the contents. This is to keep someone from simply adding dummy keys to the local data store. That local data store may not be SQLA. (end)

@Jason: Then I think you should use an encryption method that is available outside the database (and wich might be used inside SA by means of an external procedure call). So maybe a classic C-style library might be useful.