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There is no default way of enabling this. You'll have to alter the source-code (possibly plug in custom identity-session) to md5 the password before strong. Also alter the login-rest resources to be able to cope with the md5 hashes.
Well, the password is only free text on network if you use the login-call explicit ally (this contains password as body of the POST). All other methods use BASIC-authentication and therefore the password is not sent through clear-text…