That's a peculiar invocation, use a debugger to make sure :scm_password is set the way you think it is.
Or try:
set(:scm_password) { Capistrano::CLI.password_prompt("#{scm_user}@#{scm_server} password: ")}
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There is no *encrypting* you should give SSH keys a shot.
Sent from my Nexus 4.
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