Element has been working with Meta since the end of last year to help test their DMA interoperability (given we’re probably the world leader in interoperable end-to-end-encrypted communication) - and Matrix announced last month at FOSDEM that Element has successfully integrated 1:1 chats between Matrix and WhatsApp via the DMA APIs, while maintaining end-to-end encryption (having implemented full Signal compatibility in vodozemac). We’ve also formally requested interoperability with WhatsApp, as of yesterday.
I'm pretty sure that only media content is stored unencrypted, the text database should be encrypted.