diff --git a/Cargo.lock b/Cargo.lock
index 105a7fd9..011688b6 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -2,6 +2,18 @@
 # It is not intended for manual editing.
 version = 4
 
+[[package]]
+name = "accessory"
+version = "1.3.1"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "87537f9ae7cfa78d5b8ebd1a1db25959f5e737126be4d8eb44a5452fc4b63cde"
+dependencies = [
+ "macroific",
+ "proc-macro2",
+ "quote",
+ "syn",
+]
+
 [[package]]
 name = "adler2"
 version = "2.0.1"
@@ -373,6 +385,15 @@ dependencies = [
  "cipher 0.5.2",
 ]
 
+[[package]]
+name = "bs58"
+version = "0.5.1"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "bf88ba1141d185c399bee5288d850d63b8369520c1eafc32a0430b5b6c287bf4"
+dependencies = [
+ "tinyvec",
+]
+
 [[package]]
 name = "bumpalo"
 version = "3.20.3"
@@ -648,6 +669,15 @@ dependencies = [
  "hybrid-array",
 ]
 
+[[package]]
+name = "ctr"
+version = "0.9.2"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "0369ee1ad671834580515889b80f2ea915f23b8be8d0daa4bbaf2ac5c7590835"
+dependencies = [
+ "cipher 0.4.4",
+]
+
 [[package]]
 name = "curve25519-dalek"
 version = "4.1.3"
@@ -773,6 +803,18 @@ dependencies = [
  "regex",
 ]
 
+[[package]]
+name = "delegate-display"
+version = "2.1.1"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "98a85201f233142ac819bbf6226e36d0b5e129a47bd325084674261c82d4cd66"
+dependencies = [
+ "macroific",
+ "proc-macro2",
+ "quote",
+ "syn",
+]
+
 [[package]]
 name = "der"
 version = "0.7.10"
@@ -927,6 +969,18 @@ version = "0.1.9"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "7360491ce676a36bf9bb3c56c1aa791658183a54d2744120f27285738d90465a"
 
+[[package]]
+name = "fancy_constructor"
+version = "1.3.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "07b19d0e43eae2bfbafe4931b5e79c73fb1a849ca15cd41a761a7b8587f9a1a2"
+dependencies = [
+ "macroific",
+ "proc-macro2",
+ "quote",
+ "syn",
+]
+
 [[package]]
 name = "fastrand"
 version = "2.4.1"
@@ -1136,6 +1190,19 @@ dependencies = [
  "wasm-bindgen",
 ]
 
+[[package]]
+name = "gloo-utils"
+version = "0.2.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "0b5555354113b18c547c1d3a98fbf7fb32a9ff4f6fa112ce823a21641a0ba3aa"
+dependencies = [
+ "js-sys",
+ "serde",
+ "serde_json",
+ "wasm-bindgen",
+ "web-sys",
+]
+
 [[package]]
 name = "growable-bloom-filter"
 version = "2.1.1"
@@ -1682,6 +1749,23 @@ dependencies = [
  "quote",
 ]
 
+[[package]]
+name = "indexed_db_futures"
+version = "0.5.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "43315957678a70eb21fb0d2384fe86dde0d6c859a01e24ce127eb65a0143d28c"
+dependencies = [
+ "accessory",
+ "cfg-if",
+ "delegate-display",
+ "fancy_constructor",
+ "js-sys",
+ "uuid",
+ "wasm-bindgen",
+ "wasm-bindgen-futures",
+ "web-sys",
+]
+
 [[package]]
 name = "indexmap"
 version = "2.14.0"
@@ -1883,6 +1967,53 @@ version = "0.1.1"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "c41e0c4fef86961ac6d6f8a82609f55f31b05e4fce149ac5710e439df7619ba4"
 
+[[package]]
+name = "macroific"
+version = "1.3.1"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "f05c00ac596022625d01047c421a0d97d7f09a18e429187b341c201cb631b9dd"
+dependencies = [
+ "macroific_attr_parse",
+ "macroific_core",
+ "macroific_macro",
+]
+
+[[package]]
+name = "macroific_attr_parse"
+version = "1.3.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "fd94d5da95b30ae6e10621ad02340909346ad91661f3f8c0f2b62345e46a2f67"
+dependencies = [
+ "cfg-if",
+ "proc-macro2",
+ "quote",
+ "syn",
+]
+
+[[package]]
+name = "macroific_core"
+version = "1.0.2"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "13198c120864097a565ccb3ff947672d969932b7975ebd4085732c9f09435e55"
+dependencies = [
+ "proc-macro2",
+ "quote",
+ "syn",
+]
+
+[[package]]
+name = "macroific_macro"
+version = "1.1.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "b0c9853143cbed7f1e41dc39fee95f9b361bec65c8dc2a01bf609be01b61f5ae"
+dependencies = [
+ "macroific_attr_parse",
+ "macroific_core",
+ "proc-macro2",
+ "quote",
+ "syn",
+]
+
 [[package]]
 name = "maplit"
 version = "1.0.2"
@@ -1982,6 +2113,7 @@ dependencies = [
  "language-tags",
  "matrix-sdk-base",
  "matrix-sdk-common",
+ "matrix-sdk-indexeddb",
  "matrix-sdk-sqlite",
  "mime",
  "mime2ext",
@@ -2022,6 +2154,7 @@ dependencies = [
  "futures-util",
  "growable-bloom-filter",
  "matrix-sdk-common",
+ "matrix-sdk-crypto",
  "matrix-sdk-store-encryption",
  "once_cell",
  "regex",
@@ -2054,9 +2187,81 @@ dependencies = [
  "tracing",
  "tracing-subscriber",
  "wasm-bindgen",
+ "wasm-bindgen-futures",
  "web-sys",
 ]
 
+[[package]]
+name = "matrix-sdk-crypto"
+version = "0.14.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "61bf6c3195de301c98339283413a4e9d9d63c4f214ef8955147643caab161256"
+dependencies = [
+ "aes",
+ "aquamarine",
+ "as_variant",
+ "async-trait",
+ "bs58",
+ "byteorder",
+ "cfg-if",
+ "ctr",
+ "eyeball",
+ "futures-core",
+ "futures-util",
+ "hkdf",
+ "hmac",
+ "itertools 0.14.0",
+ "js_option",
+ "matrix-sdk-common",
+ "pbkdf2",
+ "rand 0.8.6",
+ "rmp-serde",
+ "ruma",
+ "serde",
+ "serde_json",
+ "sha2",
+ "subtle",
+ "thiserror 2.0.18",
+ "time",
+ "tokio",
+ "tokio-stream",
+ "tracing",
+ "ulid",
+ "url",
+ "vodozemac",
+ "zeroize",
+]
+
+[[package]]
+name = "matrix-sdk-indexeddb"
+version = "0.14.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "6e2752015e69b6b56a8df72e52f91a834771259f755eb1c65232b77348ffb16b"
+dependencies = [
+ "anyhow",
+ "async-trait",
+ "base64",
+ "getrandom 0.2.17",
+ "gloo-utils",
+ "hkdf",
+ "indexed_db_futures",
+ "js-sys",
+ "matrix-sdk-crypto",
+ "matrix-sdk-store-encryption",
+ "rmp-serde",
+ "ruma",
+ "serde",
+ "serde-wasm-bindgen",
+ "serde_json",
+ "sha2",
+ "thiserror 2.0.18",
+ "tokio",
+ "tracing",
+ "wasm-bindgen",
+ "web-sys",
+ "zeroize",
+]
+
 [[package]]
 name = "matrix-sdk-sqlite"
 version = "0.14.0"
@@ -2068,6 +2273,7 @@ dependencies = [
  "deadpool-sqlite",
  "itertools 0.14.0",
  "matrix-sdk-base",
+ "matrix-sdk-crypto",
  "matrix-sdk-store-encryption",
  "num_cpus",
  "rmp-serde",
@@ -2854,6 +3060,7 @@ dependencies = [
  "getrandom 0.2.17",
  "http",
  "indexmap",
+ "js-sys",
  "js_int",
  "konst",
  "percent-encoding",
@@ -3112,6 +3319,17 @@ dependencies = [
  "serde_derive",
 ]
 
+[[package]]
+name = "serde-wasm-bindgen"
+version = "0.6.5"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "8302e169f0eddcc139c70f139d19d6467353af16f9fce27e8c30158036a1e16b"
+dependencies = [
+ "js-sys",
+ "serde",
+ "wasm-bindgen",
+]
+
 [[package]]
 name = "serde_bytes"
 version = "0.11.19"
@@ -3465,10 +3683,12 @@ source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "743bd48c283afc0388f9b8827b976905fb217ad9e647fae3a379a9283c4def2c"
 dependencies = [
  "deranged",
+ "itoa",
  "num-conv",
  "powerfmt",
  "serde_core",
  "time-core",
+ "time-macros",
 ]
 
 [[package]]
@@ -3477,6 +3697,16 @@ version = "0.1.8"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "7694e1cfe791f8d31026952abf09c69ca6f6fa4e1a1229e18988f06a04a12dca"
 
+[[package]]
+name = "time-macros"
+version = "0.2.27"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "2e70e4c5a0e0a8a4823ad65dfe1a6930e4f4d756dcd9dd7939022b5e8c501215"
+dependencies = [
+ "num-conv",
+ "time-core",
+]
+
 [[package]]
 name = "tinystr"
 version = "0.8.3"
@@ -3801,6 +4031,16 @@ version = "1.8.1"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "e36a83ea2b3c704935a01b4642946aadd445cea40b10935e3f8bd8052b8193d6"
 
+[[package]]
+name = "ulid"
+version = "1.2.1"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "470dbf6591da1b39d43c14523b2b469c86879a53e8b758c8e090a470fe7b1fbe"
+dependencies = [
+ "rand 0.9.4",
+ "web-time",
+]
+
 [[package]]
 name = "unicase"
 version = "2.9.0"
diff --git a/Cargo.toml b/Cargo.toml
index cae6b9d7..bbcbb2f1 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -63,5 +63,6 @@ matrix-sdk = { version = "0.14", default-features = false, features = [
   "rustls-tls",
   "sqlite",
   "markdown",
+  "e2e-encryption",
 ] }
 futures-util = "0.3"
diff --git a/docs/matrix.md b/docs/matrix.md
index 67cb5f5f..7e3dd972 100644
--- a/docs/matrix.md
+++ b/docs/matrix.md
@@ -119,8 +119,22 @@ Initial rollout settings:
   engage). The absent
   `yes_i_am_very_very_sure_…_open_registration_…` flag keeps the
   server closed to anyone without the token.
-- `allow_encryption = false` per operator call; E2EE re-enabling is
-  deferred to a follow-up.
+- `allow_encryption` — server-side E2EE switch, sourced from
+  `services.hyperhive.matrix.allowEncryption` (**default `false`**, opt-in).
+  Off by default because on the hive-internal homeserver the operator
+  already controls the transport; turn it on for encrypted rooms on
+  external / federated homeservers or to keep contents opaque to the
+  homeserver admin. **The agent matrix client always supports decryption
+  regardless of this flag** — it uses the `e2e-encryption` feature of
+  `matrix-sdk` so it can read encrypted rooms it is invited to even when
+  this homeserver doesn't permit room encryption. Crypto keys are stored
+  in the per-agent sqlite store under the state dir and persist across
+  restarts (lost on `--purge`). `read_room` decrypts via
+  `room.messages()` — UTD events surface as `event_type =
+  "m.room.encrypted"` with `body = "[unable to decrypt]"`.
+  Cross-signing and automatic key backup are not enabled for the first
+  pass: static bearer-token bot accounts can't bootstrap cross-signing
+  without MSC3967.
 
 ## Hive Matrix Space
 
diff --git a/hive-matrix-mcp/src/client.rs b/hive-matrix-mcp/src/client.rs
index e5ea8e0a..efe73e29 100644
--- a/hive-matrix-mcp/src/client.rs
+++ b/hive-matrix-mcp/src/client.rs
@@ -9,6 +9,13 @@
 //! UIAA flow already minted the token + user/device, hive-c0re just
 //! handed us the bearer in a file. matrix-sdk's `restore_session` with
 //! a constructed `MatrixSession` skips the login flow entirely.
+//!
+//! E2EE is enabled via `with_encryption_settings(EncryptionSettings::default())`.
+//! Crypto keys are persisted in the sqlite store under `state_dir`
+//! (survives container restarts, lost on `--purge`). Cross-signing and
+//! automatic key backup are deliberately left at their defaults (disabled)
+//! for the first pass: bot accounts authenticated with a static bearer token
+//! can't bootstrap cross-signing without MSC3967 on the server side.
 
 use std::path::Path;
 
@@ -16,6 +23,7 @@ use anyhow::{Context, Result, anyhow};
 use matrix_sdk::{
     Client, SessionMeta, SessionTokens,
     authentication::matrix::MatrixSession,
+    encryption::EncryptionSettings,
     ruma::{OwnedDeviceId, OwnedUserId},
 };
 use serde::Deserialize;
@@ -108,6 +116,7 @@ pub async fn build_and_restore(
     let client = Client::builder()
         .homeserver_url(homeserver)
         .sqlite_store(state_dir, None)
+        .with_encryption_settings(EncryptionSettings::default())
         .build()
         .await
         .with_context(|| format!("build matrix client for {homeserver}"))?;
diff --git a/hive-matrix-mcp/src/handlers.rs b/hive-matrix-mcp/src/handlers.rs
index 23125db7..cd38835b 100644
--- a/hive-matrix-mcp/src/handlers.rs
+++ b/hive-matrix-mcp/src/handlers.rs
@@ -116,6 +116,24 @@ fn extract_body(event: &matrix_sdk::ruma::events::AnyTimelineEvent) -> String {
     }
 }
 
+/// Same as [`extract_body`] but for the `AnySyncTimelineEvent` variant
+/// returned by `TimelineEvent::raw()` (the sdk-level decrypted form from
+/// `room.messages()`).
+fn extract_body_sync(event: &matrix_sdk::ruma::events::AnySyncTimelineEvent) -> String {
+    use matrix_sdk::ruma::events::{AnySyncMessageLikeEvent, AnySyncTimelineEvent};
+    match event {
+        AnySyncTimelineEvent::MessageLike(AnySyncMessageLikeEvent::RoomMessage(ev)) => ev
+            .as_original()
+            .map_or_else(String::new, |orig| match &orig.content.msgtype {
+                MessageType::Text(t) => t.body.clone(),
+                MessageType::Notice(n) => n.body.clone(),
+                MessageType::Emote(e) => format!("* {}", e.body),
+                _ => String::new(),
+            }),
+        _ => String::new(),
+    }
+}
+
 pub async fn send_message(client: &Client, room_ref: &str, body: &str) -> DaemonResponse {
     let room = match resolve_room(client, room_ref).await {
         Ok(r) => r,
@@ -408,32 +426,37 @@ pub async fn invite_user(client: &Client, room_ref: &str, user_id: &str) -> Daem
 }
 
 pub async fn read_room(client: &Client, room_ref: &str, limit: Option<usize>) -> DaemonResponse {
-    use matrix_sdk::ruma::api::Direction;
-    use matrix_sdk::ruma::api::client::message::get_message_events;
+    use matrix_sdk::room::MessagesOptions;
 
     let room = match resolve_room(client, room_ref).await {
         Ok(r) => r,
         Err(e) => return e,
     };
-    let limit = limit.unwrap_or(50).min(200);
-    let mut req =
-        get_message_events::v3::Request::new(room.room_id().to_owned(), Direction::Backward);
-    req.limit = matrix_sdk::ruma::UInt::try_from(limit as u64)
-        .unwrap_or(matrix_sdk::ruma::UInt::from(50u32));
-    let resp = match client.send(req).await {
-        Ok(r) => r,
-        Err(e) => return DaemonResponse::error(format!("get_message_events: {e}")),
+    let limit_val = u32::try_from(limit.unwrap_or(50).min(200)).unwrap_or(50);
+    let mut opts = MessagesOptions::backward();
+    opts.limit = matrix_sdk::ruma::UInt::from(limit_val);
+    // room.messages() transparently decrypts events in encrypted rooms.
+    // UTD (unable to decrypt) events surface via `ev.kind.is_utd()` and
+    // get a sentinel body so claude knows decryption failed rather than
+    // seeing the raw encrypted blob.
+    let msgs = match room.messages(opts).await {
+        Ok(m) => m,
+        Err(e) => return DaemonResponse::error(format!("messages: {e}")),
     };
-    let events: Vec<TimelineEvent> = resp
+    let events: Vec<TimelineEvent> = msgs
         .chunk
         .iter()
-        .filter_map(|raw| {
-            let parsed = raw.deserialize().ok()?;
+        .filter_map(|ev| {
+            let parsed = ev.raw().deserialize().ok()?;
             let event_id = parsed.event_id().to_string();
             let sender = parsed.sender().to_string();
             let origin_server_ts: i64 = parsed.origin_server_ts().0.into();
             let event_type = parsed.event_type().to_string();
-            let body = extract_body(&parsed);
+            let body = if ev.kind.is_utd() {
+                "[unable to decrypt]".to_owned()
+            } else {
+                extract_body_sync(&parsed)
+            };
             Some(TimelineEvent {
                 event_id,
                 sender,
diff --git a/nix/modules/hive-matrix.nix b/nix/modules/hive-matrix.nix
index 5c8b5ba7..ca287a7b 100644
--- a/nix/modules/hive-matrix.nix
+++ b/nix/modules/hive-matrix.nix
@@ -241,6 +241,25 @@ in
       '';
     };
 
+    allowEncryption = lib.mkOption {
+      type = lib.types.bool;
+      default = false;
+      description = ''
+        Server-side switch for matrix end-to-end encryption — sets
+        tuwunel's `allow_encryption`. Off by default: on the hive-internal
+        homeserver the operator already controls the transport, so server
+        E2EE adds key-management overhead (cross-signing, device
+        verification, undecryptable-message recovery) without a clear
+        threat-model win for the common single-hive case. Turn on when
+        agents join encrypted rooms on external / federated homeservers,
+        or when the operator wants message contents opaque to the
+        homeserver admin. Independent of the agent matrix client, which
+        always supports decryption so it can read encrypted rooms it is
+        invited to regardless of this flag; this option only governs
+        whether THIS homeserver permits room encryption.
+      '';
+    };
+
     gui = {
       enable = lib.mkOption {
         type = lib.types.bool;
@@ -403,8 +422,9 @@ in
               # LoadCredential below copies the host file into a
               # 0400 dynamic-user-owned path; tuwunel reads from there.
               registration_token_file = "/run/credentials/tuwunel.service/registration_token";
-              # E2EE disabled in initial rollout; tracked in the issue tracker.
-              allow_encryption = false;
+              # Server-side E2EE is opt-in (default off); the agent matrix
+              # client always supports decryption regardless.
+              allow_encryption = cfg.allowEncryption;
               # Tuwunel's default suffix is " 💕" — suppress it so agent
               # display names are clean (just the agent name, no emoji).
               new_user_displayname_suffix = "";