What is the character limit for an encrypted USB drive password in Disk Utility?
FileVault 2, uses the User's login password as the encryption passphrase.1  macOS/OS X doesn't have a limit as to the length of a password2.

You can have a password without a limit, but practically speaking, it's not feasible to do so.



1 https://en.wikipedia.org/wiki/FileVault#Security

2 https://security.stackexchange.com/questions/22721/password-length-limits-in-history-of-operating-systems-and-popular-web-sites