Windows Azure Storage does not transparently encrypt data or provide any special encryption mechanisms. The SQL Server Transparent Data Encryption is not available in SQL Azure either.
The Cryptographic Service Providers built into the .NET Framework is a good approach to encrypting data in Windows Azure. Here's an MSDN article titled "Crypto Services and Data Security in Windows Azure" that walks through this approach.
http://msdn.microsoft.com/en-us/magazine/ee291586.aspx
Eric D. Boyd - Director, Chicago + Cloud at Centare
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