diff --git a/changelog.d/8198.feature b/changelog.d/8198.feature
new file mode 100644
index 000000000..c4401288b
--- /dev/null
+++ b/changelog.d/8198.feature
@@ -0,0 +1 @@
+Optimise `/federation/v1/user/devices/` API by only returning devices with encryption keys.
diff --git a/synapse/storage/databases/main/devices.py b/synapse/storage/databases/main/devices.py
index ecd3f3b31..def96637a 100644
--- a/synapse/storage/databases/main/devices.py
+++ b/synapse/storage/databases/main/devices.py
@@ -498,9 +498,7 @@ class DeviceWorkerStore(SQLBaseStore):
     ) -> Tuple[int, List[JsonDict]]:
         now_stream_id = self._device_list_id_gen.get_current_token()
 
-        devices = self._get_e2e_device_keys_txn(
-            txn, [(user_id, None)], include_all_devices=True
-        )
+        devices = self._get_e2e_device_keys_txn(txn, [(user_id, None)])
 
         if devices:
             user_devices = devices[user_id]