Storage Service Encryption for Azure Backup data at rest
Azure Backup already provides encryption at rest by using the passphrase that you provide while backing up data from on-premises to Azure. For virtual machines in Azure, till now the recommendation was to use Azure disk-encrypted VMs for securing backups.
Today, all new VMs that will be backed up and all new backup data from already backed-up VMs will be encrypted at rest through Storage Service Encryption (SSE). Existing data from your VM backups will be encrypted through SSE in a background activity.