Yeah Ive been testing this and while cryptomator works fine and accesses cloud files without an issue, you need to locally transfer into and out of the encrypted folder using ONLY cryptomator. This makes it uses to access files inside the folder with an app, for example a password manager. If you use a password manager you need to move the file out of the folder from inside Cryptomator and then remember to put it back inside and delete the file.
Anyone use some other encrypted folder app that actually works? I tried Droid-FS which seems to work, sort of, but in grapheneos while I can see and access the decrypted folder form other apps, when I save to the folder the file is zero bytes.