This study considers a quantizer design problem of an encrypted control system with a dynamic feedback controller. Controller parameters and signals over network links are concealed by ElGamal encryption, which is multiplicative homomorphic encryption. The encryption scheme allows direct evaluation of multiplication by using encrypted data. The proposed dynamic quantizer has a time-varying sensitivity updated by the magnitude of plant outputs and observer states. Further, it ensures asymptotic stability of the Luenberger observer in an encrypted fashion and a closed-loop system simultaneously. A numerical example demonstrates that the proposed dynamic quantizer achieves asymptotic stability and improves the control performance of the encrypted control system with a regulator.