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Content in Office 365 Groups is encrypted at rest and in transit.
Encryption at rest
When someone saves a file for an Office 365 Group, the file is automatically encrypted while it is stored in the cloud.
Encryption in transit
When someone downloads or reads/writes a file, the traffic on the network is also always automatically encrypted because the Office service is using HTTPS/SSL/TLS as transport protocols (note that these are encrypted protocols).
More information
- For examples and more information on Encryption in Office 365, visit Microsoft's information on Encryption in Office 365
- For more details about encryption spefically in SharePoint Online and OneDrive for Business, visit Microsoft's documention