public class MyEncryptedPasswordFactory extends BasicDataSourceFactory {

    @Override
    public Object getObjectInstance(Object obj, Name name, Context context, Hashtable<?, ?> environment)
            throws Exception {
        if (obj instanceof Reference) {
            Reference ref = (Reference) obj;
            DecryptPasswordUtil.replacePasswordWithDecrypted(ref, "password");
            return super.getObjectInstance(obj, name, context, environment);
        } else {
            throw new IllegalArgumentException(
                    "Expecting javax.naming.Reference as object type not " + obj.getClass().getName());
        }
    }
}

public class MyEncryptedAtomikosPasswordFactory extends EnhancedTomcatAtomikosBeanFactory {
    @Override
    public Object getObjectInstance(Object obj, Name name, Context context, Hashtable<?, ?> environment)
            throws NamingException {
        if (obj instanceof Reference) {
            Reference ref = (Reference) obj;
            DecryptPasswordUtil.replacePasswordWithDecrypted(ref, "xaProperties.password");
            return super.getObjectInstance(obj, name, context, environment);
        } else {
            throw new IllegalArgumentException(
                    "Expecting javax.naming.Reference as object type not " + obj.getClass().getName());
        }
    }
}

public class DecryptPasswordUtil {

    public static void replacePasswordWithDecrypted(Reference reference, String passwordKey) {
        if(reference == null) {
            throw new IllegalArgumentException("Reference object must not be null");
        }

        // Search for password addr and replace with decrypted
        for (int i = 0; i < reference.size(); i++) {
            RefAddr addr = reference.get(i);
            if (passwordKey.equals(addr.getType())) {
                if (addr.getContent() == null) {
                    throw new IllegalArgumentException("Password must not be null for key " + passwordKey);
                }
                String decrypted = yourDecryptionMethod(addr.getContent().toString());
                reference.remove(i);
                reference.add(i, new StringRefAddr(passwordKey, decrypted));
                break;
            }
        }
    }
}

<Resource factory="com.mycompany.MyEncryptedPasswordFactory" username="user" password="encryptedPassword" ...other options... />

<Resource factory="com.mycompany.MyEncryptedAtomikosPasswordFactory" type="com.atomikos.jdbc.AtomikosDataSourceBean" xaProperties.user="user" xaProperties.password="encryptedPassword" ...other options... />

<Resource
    name="jdbc/myDataSource"
    auth="Container"
    type="javax.sql.DataSource"
    username="user"
    password="encryptedpassword"
    driverClassName="driverClass"
    factory="mypackage.MyCustomBasicDataSourceFactory"
    url="jdbc:blabla://..."/>

package mypackage;

public class MyCustomBasicDataSourceFactory extends org.apache.tomcat.dbcp.dbcp.BasicDataSourceFactory {
    @Override
    public Object getObjectInstance(Object obj, Name name, Context nameCtx, Hashtable environment) throws Exception {
        Object o = super.getObjectInstance(obj, name, nameCtx, environment);
        if (o != null) {
            BasicDataSource ds = (BasicDataSource) o;
            if (ds.getPassword() != null && ds.getPassword().length() > 0) {
                String pwd = MyPasswordUtilClass.unscramblePassword(ds.getPassword());
                ds.setPassword(pwd);
            }
            return ds;
        } else {
            return null;
        }
    }
}

@Bean
public DataSource dataSource() {
    DataSource ds = null;
    JndiTemplate jndi = new JndiTemplate();
    try {
        ds = jndi.lookup("java:comp/env/jdbc/myDataSource", DataSource.class);
    } catch (NamingException e) {
        log.error("NamingException for java:comp/env/jdbc/myDataSource", e);
    }
    return ds;
}

print(SHA1CryptoServiceProvider sHA1Hasher = new SHA1CryptoServiceProvider();
        ASCIIEncoding enc = new ASCIIEncoding();

        byte[] arrbytHashValue = sHA1Hasher.ComputeHash(enc.GetBytes(clearTextPW));
        string HashData = System.BitConverter.ToString(arrbytHashValue);
        HashData = HashData.Replace("-", "");
        if (HashData == databaseHashedPassWO)
        {
            return true;
        }
        else
        {
            return false;
        });