diff --git a/lib/internal/streams/lazy_transform.js b/lib/internal/streams/lazy_transform.js
index bd68bef4b6dd17..3607d985346992 100644
--- a/lib/internal/streams/lazy_transform.js
+++ b/lib/internal/streams/lazy_transform.js
@@ -5,6 +5,7 @@
 
 const stream = require('stream');
 const util = require('util');
+const crypto = require('crypto');
 
 module.exports = LazyTransform;
 
@@ -22,7 +23,11 @@ util.inherits(LazyTransform, stream.Transform);
     get: function() {
       stream.Transform.call(this, this._options);
       this._writableState.decodeStrings = false;
-      this._writableState.defaultEncoding = 'latin1';
+
+      if (!this._options || !this._options.defaultEncoding) {
+        this._writableState.defaultEncoding = crypto.DEFAULT_ENCODING;
+      }
+
       return this[prop];
     },
     set: function(val) {
diff --git a/test/parallel/test-crypto.js b/test/parallel/test-crypto.js
index 46218e72754eba..37729b2cbcde37 100644
--- a/test/parallel/test-crypto.js
+++ b/test/parallel/test-crypto.js
@@ -189,3 +189,42 @@ console.log(crypto.randomBytes(16));
 assert.throws(function() {
   tls.createSecureContext({ crl: 'not a CRL' });
 }, /^Error: Failed to parse CRL$/);
+
+/**
+ * Check if the stream function uses utf8 as a default encoding.
+ **/
+
+function testEncoding(options, assertionHash) {
+  const hash = crypto.createHash('sha256', options);
+  let hashValue = '';
+
+  hash.on('data', (data) => {
+    hashValue += data.toString('hex');
+  });
+
+  hash.on('end', common.mustCall(() => {
+    assert.strictEqual(hashValue, assertionHash);
+  }));
+
+  hash.write('öäü');
+  hash.end();
+}
+
+// Hash of "öäü" in utf8 format
+const assertionHashUtf8 =
+  '4f53d15bee524f082380e6d7247cc541e7cb0d10c64efdcc935ceeb1e7ea345c';
+
+// Hash of "öäü" in latin1 format
+const assertionHashLatin1 =
+  'cd37bccd5786e2e76d9b18c871e919e6eb11cc12d868f5ae41c40ccff8e44830';
+
+testEncoding(undefined, assertionHashUtf8);
+testEncoding({}, assertionHashUtf8);
+
+testEncoding({
+  defaultEncoding: 'utf8'
+}, assertionHashUtf8);
+
+testEncoding({
+  defaultEncoding: 'latin1'
+}, assertionHashLatin1);