Yes, encryption is supported: 

• For the iRAPP Client, our encryption is SSLv3, X509 - Key Length is 512 bits.
• For RDP, the Basic RDP encryption method, RC4 with Key Length 40 bytes is enabled by default.  RDP support 128bit encryption as well.

For additional details about RDP encryption, please see http://msdn.microsoft.com/en-us/library/cc240511%28v=PROT.10%29.aspx.