Cytosine-5-methylation stabilises DNA duplexes and is associated with transcriptional repression; 5-methylcytosine undergoes hydroxylation to 5-hydroxymethylcytosine, a modification of unknown biological function. Spectroscopic and calorimetric analyses show that 5-hydroxymethylcytosine introduction reverses the stabilising effect of 5-methylcytosine, suggesting that in some contexts, 5-methylcytosine hydroxylation may, along with other factors, contribute to the alleviation of transcriptional repression.
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Thalhammer et al. (2011) studied this question.
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