diff --git a/lib/encryption/key_manager.dart b/lib/encryption/key_manager.dart
index e2262627..16e8468b 100644
--- a/lib/encryption/key_manager.dart
+++ b/lib/encryption/key_manager.dart
@@ -190,20 +190,21 @@ class KeyManager {
           event.content['session_id'] == sessionId) {
         final decrypted = encryption.decryptRoomEventSync(roomId, event);
         if (decrypted.type != EventTypes.Encrypted) {
+          // Remove this from the state to make sure it does not appear as last event
+          room.states.remove(EventTypes.Encrypted);
           // Set the decrypted event as last event by adding it to the state
-          room.setState(decrypted);
+          room.states[decrypted.type] = {'': decrypted};
           // Also store in database
           final database = client.database;
           if (database != null) {
-            await database.transaction(() async {
-              await database.storeEventUpdate(
-                  EventUpdate(
-                    roomID: room.id,
-                    type: EventUpdateType.state,
-                    content: decrypted.toJson(),
-                  ),
-                  client);
-            });
+            await database.storeEventUpdate(
+              EventUpdate(
+                roomID: room.id,
+                type: EventUpdateType.state,
+                content: decrypted.toJson(),
+              ),
+              client,
+            );
           }
         }
       }
diff --git a/lib/src/client.dart b/lib/src/client.dart
index 71e60283..3459d710 100644
--- a/lib/src/client.dart
+++ b/lib/src/client.dart
@@ -872,8 +872,11 @@ class Client extends MatrixApi {
           // Try to decrypt encrypted events but don't update the database.
           if (leftRoom.encrypted && leftRoom.client.encryptionEnabled) {
             if (timeline.events[i].type == EventTypes.Encrypted) {
-              timeline.events[i] = await leftRoom.client.encryption!
-                  .decryptRoomEvent(leftRoom.id, timeline.events[i]);
+              timeline.events[i] =
+                  await leftRoom.client.encryption!.decryptRoomEvent(
+                leftRoom.id,
+                timeline.events[i],
+              );
             }
           }
         }
diff --git a/lib/src/room.dart b/lib/src/room.dart
index eb3de7da..cef98d89 100644
--- a/lib/src/room.dart
+++ b/lib/src/room.dart
@@ -1322,7 +1322,10 @@ class Room {
       for (var i = 0; i < events.length; i++) {
         if (events[i].type == EventTypes.Encrypted &&
             events[i].content['can_request_session'] == true) {
-          events[i] = await client.encryption!.decryptRoomEvent(id, events[i]);
+          events[i] = await client.encryption!.decryptRoomEvent(
+            id,
+            events[i],
+          );
         }
       }
     }
@@ -1414,8 +1417,11 @@ class Room {
               for (var i = 0; i < chunk.events.length; i++) {
                 if (chunk.events[i].content['can_request_session'] == true) {
                   chunk.events[i] = await client.encryption!.decryptRoomEvent(
-                      id, chunk.events[i],
-                      store: !isArchived);
+                    id,
+                    chunk.events[i],
+                    store: !isArchived,
+                    updateType: EventUpdateType.history,
+                  );
                 }
               }
             });
@@ -1632,8 +1638,10 @@ class Room {
       final event = Event.fromMatrixEvent(matrixEvent, this);
       if (event.type == EventTypes.Encrypted && client.encryptionEnabled) {
         // attempt decryption
-        return await client.encryption
-            ?.decryptRoomEvent(id, event, store: false);
+        return await client.encryption?.decryptRoomEvent(
+          id,
+          event,
+        );
       }
       return event;
     } on MatrixException catch (err) {
diff --git a/lib/src/timeline.dart b/lib/src/timeline.dart
index 18fa8b7c..b1318c3e 100644
--- a/lib/src/timeline.dart
+++ b/lib/src/timeline.dart
@@ -227,8 +227,10 @@ class Timeline {
     if (room.encrypted && room.client.encryptionEnabled) {
       for (var i = 0; i < newEvents.length; i++) {
         if (newEvents[i].type == EventTypes.Encrypted) {
-          newEvents[i] = await room.client.encryption!
-              .decryptRoomEvent(room.id, newEvents[i]);
+          newEvents[i] = await room.client.encryption!.decryptRoomEvent(
+            room.id,
+            newEvents[i],
+          );
         }
       }
     }
@@ -314,8 +316,12 @@ class Timeline {
         if (events[i].type == EventTypes.Encrypted &&
             events[i].messageType == MessageTypes.BadEncrypted &&
             events[i].content['session_id'] == sessionId) {
-          events[i] = await encryption.decryptRoomEvent(room.id, events[i],
-              store: true);
+          events[i] = await encryption.decryptRoomEvent(
+            room.id,
+            events[i],
+            store: true,
+            updateType: EventUpdateType.history,
+          );
           onChange?.call(i);
           if (events[i].type != EventTypes.Encrypted) {
             decryptAtLeastOneEvent = true;