Core FTP

I am configuring this up for a sensitive client. They want to no if while using SFTP and keypair authentication, does the username get passed clear text or encrypted?
Thanks in advance.

When I want to set up keypair authentication, do I generate the keypair or does the person who needs to access the server generate the keypair and then they send me their public key?
I have read two different segments about key authentication and I'm confused.
Please advise.
Thanks
Mike