diff --git a/tests/processing/test_functions.py b/tests/processing/test_functions.py
index 5bce87b7..bf79a490 100644
--- a/tests/processing/test_functions.py
+++ b/tests/processing/test_functions.py
@@ -2,10 +2,14 @@
 import sys
 from unittest import mock
 
+import cryptography
+import numpy as np
 import pytest
 from litdata import StreamingDataset, merge_datasets, optimize, walk
 from litdata.processing.functions import _get_input_dir, _resolve_dir
 from litdata.streaming.cache import Cache
+from litdata.utilities.encryption import FernetEncryption, RSAEncryption
+from PIL import Image
 
 
 @pytest.mark.skipif(sys.platform == "win32", reason="currently not supported for windows.")
@@ -64,6 +68,11 @@ def another_fn(i: int):
     return i, i**2
 
 
+def random_image(index):
+    fake_img = Image.fromarray(np.random.randint(0, 255, (32, 32, 3), dtype=np.uint8))
+    return {"image": fake_img, "class": index}
+
+
 @pytest.mark.skipif(sys.platform == "win32" or sys.platform == "darwin", reason="too slow")
 def test_optimize_append_overwrite(tmpdir):
     output_dir = str(tmpdir / "output_dir")
@@ -272,3 +281,114 @@ def test_merge_datasets(tmpdir):
 
     assert len(ds) == 20
     assert ds[:] == list(range(20))
+
+
+@pytest.mark.skipif(sys.platform == "win32", reason="Not tested on windows")
+def test_optimize_with_fernet_encryption(tmpdir):
+    output_dir = str(tmpdir / "output_dir")
+
+    # ----------------- sample level -----------------
+    fernet = FernetEncryption(password="password", level="sample")
+    optimize(
+        fn=compress,
+        inputs=list(range(5)),
+        num_workers=1,
+        output_dir=output_dir,
+        chunk_bytes="64MB",
+        encryption=fernet,
+    )
+
+    ds = StreamingDataset(output_dir, encryption=fernet)
+    assert len(ds) == 5
+    assert ds[:] == [(i, i**2) for i in range(5)]
+
+    # ----------------- chunk level -----------------
+    fernet = FernetEncryption(password="password", level="chunk")
+    optimize(
+        fn=compress,
+        inputs=list(range(5)),
+        num_workers=1,
+        output_dir=output_dir,
+        chunk_bytes="64MB",
+        encryption=fernet,
+        mode="overwrite",
+    )
+
+    ds = StreamingDataset(output_dir, encryption=fernet)
+    assert len(ds) == 5
+    assert ds[:] == [(i, i**2) for i in range(5)]
+
+    # ----------------- decrypt with different conf  -----------------
+
+    fernet.level = "sample"
+    ds = StreamingDataset(output_dir, encryption=fernet)
+    with pytest.raises(ValueError, match="Encryption level mismatch."):
+        ds[0]
+
+    fernet = FernetEncryption(password="password", level="chunk")
+    ds = StreamingDataset(output_dir, encryption=fernet)
+    with pytest.raises(cryptography.fernet.InvalidToken, match=""):
+        ds[0]
+
+    # ----------------- test with other alg -----------------
+    rsa = RSAEncryption(password="password", level="sample")
+    ds = StreamingDataset(output_dir, encryption=rsa)
+    with pytest.raises(ValueError, match="Encryption algorithm mismatch."):
+        ds[0]
+
+    # ----------------- test with random images -----------------
+
+    fernet = FernetEncryption(password="password", level="chunk")
+    optimize(
+        fn=random_image,
+        inputs=list(range(5)),
+        num_workers=1,
+        output_dir=output_dir,
+        chunk_bytes="64MB",
+        encryption=fernet,
+        mode="overwrite",
+    )
+
+    ds = StreamingDataset(output_dir, encryption=fernet)
+
+    assert len(ds) == 5
+    assert ds[0]["class"] == 0
+
+
+@pytest.mark.skipif(sys.platform == "win32", reason="Not tested on windows")
+def test_optimize_with_rsa_encryption(tmpdir):
+    output_dir = str(tmpdir / "output_dir")
+
+    # ----------------- sample level -----------------
+    rsa = RSAEncryption(password="password", level="sample")
+    optimize(
+        fn=compress,
+        inputs=list(range(5)),
+        num_workers=1,
+        output_dir=output_dir,
+        chunk_bytes="64MB",
+        encryption=rsa,
+    )
+
+    ds = StreamingDataset(output_dir, encryption=rsa)
+    assert len(ds) == 5
+    assert ds[:] == [(i, i**2) for i in range(5)]
+
+    # ----------------- chunk level -----------------
+    rsa = RSAEncryption(password="password", level="chunk")
+    optimize(
+        fn=compress,
+        inputs=list(range(5)),
+        num_workers=1,
+        output_dir=output_dir,
+        chunk_bytes="64MB",
+        encryption=rsa,
+        mode="overwrite",
+    )
+
+    ds = StreamingDataset(output_dir, encryption=rsa)
+    assert len(ds) == 5
+    assert ds[:] == [(i, i**2) for i in range(5)]
+
+    # ----------------- test with random images  -----------------
+    # RSA Encryption throws an error when trying to encrypt large data