OK... Here is what I have done.
Windows 10. Latest Git
In the Boxcryptor mount point,
Create an encrypted project folder. Add it to git. Add files to git. Try to commit something, and you are unable to update the head file (maybe there is more, but it fails at that point). I've also tried running Git as Administrator
cannot update the ref 'HEAD': unable to append to '.git/logs/HEAD': Permission denied
Create an unencrypted project folder, do the same no problem. Works great right in the mount point.
Encrypt that folder, make changes, and try to commit them, and bang! Happens again. Permission denied.
Adding files doesn't seem to be a problem. Wondering if there is some kind of collision with the name or???
Edit: I tried through my IDE, a GIT GUI, and Git command line. Same effect. Also, an old project that was encrypted by Boxcryptor I added GIT worked the same way.