diff --git a/playwright/e2e/crypto/utils.ts b/playwright/e2e/crypto/utils.ts
index 4aab27f51a..792dcedd63 100644
--- a/playwright/e2e/crypto/utils.ts
+++ b/playwright/e2e/crypto/utils.ts
@@ -7,8 +7,8 @@ Please see LICENSE files in the repository root for full details.
 */
 
 import { expect, type JSHandle, type Page } from "@playwright/test";
+import { type ICreateRoomOpts, type MatrixClient } from "matrix-js-sdk/src/matrix";
 
-import type { ICreateRoomOpts, MatrixClient } from "matrix-js-sdk/src/matrix";
 import type {
     CryptoEvent,
     EmojiMapping,
@@ -499,6 +499,51 @@ export const verify = async (app: ElementAppPage, bob: Bot) => {
     await roomInfo.getByRole("button", { name: "Got it" }).click();
 };
 
+/**
+ * Verify two instances of the Element app by emoji.
+ * @param aliceElementApp
+ * @param bobElementApp
+ */
+export const verifyApp = async (
+    aliceDisplayName: string,
+    aliceElementApp: ElementAppPage,
+    bobDisplayName: string,
+    bobElementApp: ElementAppPage,
+) => {
+    // Alice opens room info and starts verification.
+    const aliceRoomInfo = aliceElementApp.page.locator(".mx_RightPanel");
+    if (await aliceRoomInfo.isHidden()) {
+        await aliceElementApp.toggleRoomInfoPanel();
+    }
+
+    await aliceElementApp.page.locator(".mx_RightPanel").getByRole("menuitem", { name: "People" }).click();
+    await aliceRoomInfo.getByText("Bob").click();
+    await aliceRoomInfo.getByRole("button", { name: "Verify" }).click();
+    await aliceRoomInfo.getByRole("button", { name: "Start Verification" }).click();
+
+    // Navigate to the DM created by Alice and accept the invite
+    const oldRoomId = await bobElementApp.getCurrentRoomIdFromUrl();
+    await bobElementApp.viewRoomByName(aliceDisplayName);
+    await bobElementApp.page.getByRole("button", { name: "Start chatting" }).click();
+
+    // Bob accepts the verification request.
+    await bobElementApp.page.getByRole("button", { name: "Verify" }).click({ timeout: 5000 });
+
+    // This requires creating a DM, so can take a while. Give it a longer timeout.
+    await aliceRoomInfo.getByRole("button", { name: "Verify by emoji" }).click({ timeout: 30000 });
+    await bobElementApp.page.getByRole("button", { name: "Verify by emoji" }).click();
+
+    await aliceRoomInfo.getByRole("button", { name: "They match" }).click();
+    await bobElementApp.page.getByRole("button", { name: "They match" }).click();
+
+    // Assert the verification was successful.
+    await expect(aliceRoomInfo.getByText(`You've successfully verified ${bobDisplayName}!`)).toBeVisible();
+    await expect(bobElementApp.page.getByText(`You've successfully verified ${aliceDisplayName}!`)).toBeVisible();
+
+    // Navigate Bob back to the old room.
+    await bobElementApp.viewRoomById(oldRoomId);
+};
+
 /**
  * Wait for a verifier to exist for a VerificationRequest
  *
diff --git a/playwright/e2e/settings/encryption-user-tab/other-devices.spec.ts b/playwright/e2e/settings/encryption-user-tab/other-devices.spec.ts
new file mode 100644
index 0000000000..6c20af2d9a
--- /dev/null
+++ b/playwright/e2e/settings/encryption-user-tab/other-devices.spec.ts
@@ -0,0 +1,253 @@
+/*
+ * Copyright 2026 Element Creations Ltd.
+ *
+ * SPDX-License-Identifier: AGPL-3.0-only OR GPL-3.0-only OR LicenseRef-Element-Commercial
+ * Please see LICENSE files in the repository root for full details.
+ */
+
+import { createNewInstance } from "@element-hq/element-web-playwright-common";
+
+import { test, expect } from "./index";
+import { ElementAppPage } from "../../../pages/ElementAppPage";
+import { createRoom, sendMessageInCurrentRoom, verifyApp } from "../../crypto/utils";
+
+test.describe("Other people's devices section in Encryption tab", () => {
+    test.use({
+        displayName: "alice",
+    });
+
+    test("unverified devices should be able to decrypt while global blacklist is not toggled", async ({
+        page: alicePage,
+        app: aliceElementApp,
+        homeserver,
+        browser,
+        user: aliceCredentials,
+    }, testInfo) => {
+        await aliceElementApp.client.bootstrapCrossSigning(aliceCredentials);
+
+        // Create a second browser instance.
+        const bobCredentials = await homeserver.registerUser(`user_${testInfo.testId}_bob`, "password", "bob");
+        const bobPage = await createNewInstance(browser, bobCredentials, {});
+        const bobElementApp = new ElementAppPage(bobPage);
+        await bobElementApp.client.bootstrapCrossSigning(bobCredentials);
+
+        // Create the room and invite bob
+        await createRoom(alicePage, "TestRoom", true);
+        await aliceElementApp.inviteUserToCurrentRoom(bobCredentials.userId);
+
+        // Bob accepts the invite
+        await bobPage.getByRole("option", { name: "TestRoom" }).click();
+        await bobPage.getByRole("button", { name: "Accept" }).click();
+
+        // Alice sends a message, which Bob should be able to decrypt
+        await sendMessageInCurrentRoom(alicePage, "Decryptable");
+        await expect(bobPage.getByText("Decryptable")).toBeVisible();
+    });
+
+    test("unverified devices should not be able to decrypt while global blacklist is toggled", async ({
+        page: alicePage,
+        app: aliceElementApp,
+        homeserver,
+        browser,
+        user: aliceCredentials,
+        util,
+    }, testInfo) => {
+        await aliceElementApp.client.bootstrapCrossSigning(aliceCredentials);
+
+        // Enable blacklist toggle.
+        const dialog = await util.openEncryptionTab();
+        const blacklistToggle = dialog.getByRole("switch", {
+            name: "In encrypted rooms, only send messages to verified users",
+        });
+        await blacklistToggle.scrollIntoViewIfNeeded();
+        await expect(blacklistToggle).toBeVisible();
+        await blacklistToggle.click();
+        await aliceElementApp.settings.closeDialog();
+
+        // Create a second browser instance.
+        const bobCredentials = await homeserver.registerUser(`user_${testInfo.testId}_bob`, "password", "bob");
+        const bobPage = await createNewInstance(browser, bobCredentials, {});
+        const bobElementApp = new ElementAppPage(bobPage);
+        await bobElementApp.client.bootstrapCrossSigning(bobCredentials);
+
+        // Create the room and invite bob
+        await createRoom(alicePage, "TestRoom", true);
+        await aliceElementApp.inviteUserToCurrentRoom(bobCredentials.userId);
+
+        // Bob accepts the invite
+        await bobPage.getByRole("option", { name: "TestRoom" }).click();
+        await bobPage.getByRole("button", { name: "Accept" }).click();
+
+        // Alice sends a message, which Bob should not be able to decrypt
+        await sendMessageInCurrentRoom(alicePage, "Undecryptable");
+        await expect(
+            bobPage.getByText(
+                "The sender has blocked you from receiving this message because your device is unverified",
+            ),
+        ).toBeVisible();
+    });
+
+    test("verified devices should be able to decrypt while global blacklist is toggled", async ({
+        page: alicePage,
+        app: aliceElementApp,
+        homeserver,
+        browser,
+        user: aliceCredentials,
+        util,
+    }, testInfo) => {
+        await aliceElementApp.client.bootstrapCrossSigning(aliceCredentials);
+
+        // Enable blacklist toggle.
+        const dialog = await util.openEncryptionTab();
+        const blacklistToggle = dialog.getByRole("switch", {
+            name: "In encrypted rooms, only send messages to verified users",
+        });
+        await blacklistToggle.scrollIntoViewIfNeeded();
+        await expect(blacklistToggle).toBeVisible();
+        await blacklistToggle.click();
+        await aliceElementApp.settings.closeDialog();
+
+        // Create a second browser instance.
+        const bobCredentials = await homeserver.registerUser(`user_${testInfo.testId}_bob`, "password", "bob");
+        const bobPage = await createNewInstance(browser, bobCredentials, {});
+        const bobElementApp = new ElementAppPage(bobPage);
+        await bobElementApp.client.bootstrapCrossSigning(bobCredentials);
+
+        // Create the room and invite bob
+        await createRoom(alicePage, "TestRoom", true);
+        await aliceElementApp.inviteUserToCurrentRoom(bobCredentials.userId);
+
+        // Bob accepts the invite and dismisses the warnings.
+        await bobPage.getByRole("option", { name: "TestRoom" }).click();
+        await bobPage.getByRole("button", { name: "Accept" }).click();
+        await bobPage.getByRole("button", { name: "Dismiss" }).click(); // enable notifications
+        await bobPage.getByRole("button", { name: "Dismiss" }).click(); // enable key storage
+        await bobPage.getByRole("button", { name: "Yes, dismiss" }).click(); // enable key storage x2
+
+        // Perform verification.
+        await verifyApp("alice", aliceElementApp, "bob", bobElementApp);
+
+        // Alice sends a message, which Bob should be able to decrypt
+        await sendMessageInCurrentRoom(alicePage, "Decryptable");
+        await expect(bobPage.getByText("Decryptable")).toBeVisible();
+    });
+
+    test("setting per-room unverified blacklist toggle does not affect other rooms", async ({
+        page: alicePage,
+        app: aliceElementApp,
+        homeserver,
+        browser,
+        user: aliceCredentials,
+    }, testInfo) => {
+        await aliceElementApp.client.bootstrapCrossSigning(aliceCredentials);
+
+        // Create a second browser instance.
+        const bobCredentials = await homeserver.registerUser(`user_${testInfo.testId}_bob`, "password", "bob");
+        const bobPage = await createNewInstance(browser, bobCredentials, {});
+        const bobElementApp = new ElementAppPage(bobPage);
+        await bobElementApp.client.bootstrapCrossSigning(bobCredentials);
+
+        // Alice creates the room and invite Bob.
+        await createRoom(alicePage, "TestRoom", true);
+        await aliceElementApp.inviteUserToCurrentRoom(bobCredentials.userId);
+
+        // Bob accepts the invite.
+        await bobPage.getByRole("option", { name: "TestRoom" }).click();
+        await bobPage.getByRole("button", { name: "Accept" }).click();
+
+        // Alice configures her client to blacklist unverified users in this room.
+        const dialog = await aliceElementApp.settings.openRoomSettings("Security & Privacy");
+        await dialog.getByRole("switch", { name: "Only send messages to verified users." }).click();
+        await aliceElementApp.settings.closeDialog();
+
+        // Alice sends a message which Bob should not be able to decrypt.
+        await sendMessageInCurrentRoom(alicePage, "Undecryptable");
+        await expect(
+            bobPage.getByText(
+                "The sender has blocked you from receiving this message because your device is unverified",
+            ),
+        ).toBeVisible();
+
+        // Alice dismisses key storage warnings, as they now hide the "New conversation" button.
+        await alicePage.getByRole("button", { name: "Dismiss" }).click(); // enable key storage
+        await alicePage.getByRole("button", { name: "Yes, dismiss" }).click(); // enable key storage x2
+
+        // Alice creates a second room and invites Bob.
+        await createRoom(alicePage, "TestRoom2", true);
+        await aliceElementApp.toggleRoomInfoPanel(); // should not be necessary, called in body of below
+        await aliceElementApp.inviteUserToCurrentRoom(bobCredentials.userId);
+
+        // Bob accepts the invite.
+        await bobPage.getByRole("option", { name: "TestRoom2" }).click();
+        await bobPage.getByRole("button", { name: "Accept" }).click();
+
+        // Alice sends a message in the new room, which Bob should be able to decrypt.
+        await sendMessageInCurrentRoom(alicePage, "Decryptable");
+        await expect(bobPage.getByText("Decryptable")).toBeVisible();
+    });
+
+    test("setting per-room unverified blacklist toggle overrides global toggle", async ({
+        page: alicePage,
+        app: aliceElementApp,
+        homeserver,
+        browser,
+        user: aliceCredentials,
+        util,
+    }, testInfo) => {
+        await aliceElementApp.client.bootstrapCrossSigning(aliceCredentials);
+
+        // Enable blacklist toggle.
+        let dialog = await util.openEncryptionTab();
+        const blacklistToggle = dialog.getByRole("switch", {
+            name: "In encrypted rooms, only send messages to verified users",
+        });
+        await blacklistToggle.scrollIntoViewIfNeeded();
+        await expect(blacklistToggle).toBeVisible();
+        await blacklistToggle.click();
+        await aliceElementApp.settings.closeDialog();
+
+        // Create a second browser instance.
+        const bobCredentials = await homeserver.registerUser(`user_${testInfo.testId}_bob`, "password", "bob");
+        const bobPage = await createNewInstance(browser, bobCredentials, {});
+        const bobElementApp = new ElementAppPage(bobPage);
+        await bobElementApp.client.bootstrapCrossSigning(bobCredentials);
+
+        // Alice creates the room and invite Bob.
+        await createRoom(alicePage, "TestRoom", true);
+        await aliceElementApp.inviteUserToCurrentRoom(bobCredentials.userId);
+
+        // Bob accepts the invite.
+        await bobPage.getByRole("option", { name: "TestRoom" }).click();
+        await bobPage.getByRole("button", { name: "Accept" }).click();
+
+        // Alice configures her client to allow sending to unverified users in this room.
+        dialog = await aliceElementApp.settings.openRoomSettings("Security & Privacy");
+        await dialog.getByRole("switch", { name: "Only send messages to verified users." }).click();
+        await aliceElementApp.settings.closeDialog();
+
+        // Alice sends a message which Bob should be able to decrypt.
+        await sendMessageInCurrentRoom(alicePage, "Decryptable");
+        await expect(bobPage.getByText("Decryptable")).toBeVisible();
+
+        // Alice dismisses key storage warnings, as they now hide the "New conversation" button.
+        await alicePage.getByRole("button", { name: "Dismiss" }).click(); // enable key storage
+        await alicePage.getByRole("button", { name: "Yes, dismiss" }).click(); // enable key storage x2
+
+        // Alice creates a second room and invites Bob.
+        await createRoom(alicePage, "TestRoom2", true);
+        await aliceElementApp.toggleRoomInfoPanel(); // should not be necessary, called in body of below
+        await aliceElementApp.inviteUserToCurrentRoom(bobCredentials.userId);
+
+        // Bob accepts the invite.
+        await bobPage.getByRole("option", { name: "TestRoom2" }).click();
+        await bobPage.getByRole("button", { name: "Accept" }).click();
+
+        // Alice sends a message in the new room, which Bob should not be able to decrypt.
+        await sendMessageInCurrentRoom(alicePage, "Undecryptable");
+        await expect(
+            bobPage.getByText(
+                "The sender has blocked you from receiving this message because your device is unverified",
+            ),
+        ).toBeVisible();
+    });
+});
diff --git a/src/components/structures/MatrixChat.tsx b/src/components/structures/MatrixChat.tsx
index 8a9ffdd115..4c76bc8e99 100644
--- a/src/components/structures/MatrixChat.tsx
+++ b/src/components/structures/MatrixChat.tsx
@@ -1793,8 +1793,20 @@ export default class MatrixChat extends React.PureComponent<IProps, IState> {
 
         const crypto = cli.getCrypto();
         if (crypto) {
-            const blacklistEnabled = SettingsStore.getValueAt(SettingLevel.DEVICE, "blacklistUnverifiedDevices");
-            crypto.globalBlacklistUnverifiedDevices = blacklistEnabled;
+            crypto.globalBlacklistUnverifiedDevices = SettingsStore.getValueAt(
+                SettingLevel.DEVICE,
+                "blacklistUnverifiedDevices",
+            );
+            SettingsStore.watchSetting(
+                "blacklistUnverifiedDevices",
+                null,
+                (_settingName, _roomId, atLevel, blacklistEnabled: boolean) => {
+                    if (atLevel != SettingLevel.DEVICE) {
+                        return;
+                    }
+                    crypto.globalBlacklistUnverifiedDevices = blacklistEnabled;
+                },
+            );
         }
 
         // Cannot be done in OnLoggedIn as at that point the AccountSettingsHandler doesn't yet have a client
diff --git a/test/unit-tests/components/structures/MatrixChat-test.tsx b/test/unit-tests/components/structures/MatrixChat-test.tsx
index 24b190c0f8..8bffcda5d6 100644
--- a/test/unit-tests/components/structures/MatrixChat-test.tsx
+++ b/test/unit-tests/components/structures/MatrixChat-test.tsx
@@ -1839,4 +1839,39 @@ describe("<MatrixChat />", () => {
             );
         });
     });
+
+    describe("blacklistUnverifiedDevices settings", () => {
+        beforeEach(async () => {
+            mockPlatformPeg();
+            getComponent({});
+            // Force a client start manually to avoid needing to go through the login flow.
+            defaultDispatcher.dispatch({
+                action: Action.ClientStarted,
+            });
+            await flushPromises();
+        });
+
+        afterEach(() => {
+            SettingsStore.reset();
+        });
+
+        it("should ignore room-device-level blacklistUnverifiedDevices updates", async () => {
+            // Set the blacklist toggle at a room-specific level ...
+            await SettingsStore.setValue(
+                "blacklistUnverifiedDevices",
+                "!room:example.com",
+                SettingLevel.ROOM_DEVICE,
+                true,
+            );
+            // ... which SHOULD NOT affect the global blacklist property.
+            expect(mockClient.getCrypto()!.globalBlacklistUnverifiedDevices).toBeFalsy();
+        }, 10e3);
+
+        it("should update globalBlacklistUnverifiedDevices on device-level updates", async () => {
+            // Set the blacklist toggle at a device level ...
+            await SettingsStore.setValue("blacklistUnverifiedDevices", null, SettingLevel.DEVICE, true);
+            // shich SHOULD affect the global blacklist property.
+            expect(mockClient.getCrypto()!.globalBlacklistUnverifiedDevices).toBeTruthy();
+        }, 10e3);
+    });
 });