Can I safely patent or license an algorithm that affects 128-bit encryption?

Unfortunately, there is nothing you can do to proactively immunize your invention from a secrecy order. All patent applications are reviewed to determine whether they implicate national security interests, and the various defense-related agencies issue the secrecy orders. Once you file your patent application, you subject yourself to the government's process. However, without knowing more about the invention itself and how it might implicate national security, it is impossible to predict whether it might be flagged for a secrecy order by any given agency. It is even possible that your invention may be subject to a secrecy order that is later lifted.   You may be able to avoid this altogether by protecting the invention as a trade secret instead. Unlike patents, trade secrets do not expire as long as continue efforts to maintain secrecy and the secret itself continues to have commercial value by not being publicly known. However, you cannot prevent someone else from using your trade secret if they develop it independently without violating your NDA. You can license your trade secret, but you will need to make ongoing efforts to ensure it remains secret.   That said, you need to ensure that you will not be violating any export control laws by disclosing the trade secret to entities with foreign ownership or control. The Bureau of Industry and Science (BIS) includes an FAQ regarding encryption technologies in particular that may be helpful here.  Encryption FAQs