At first the discovery of hydroxymethylcytosine (hmC) in mammalian DNA focused upon its possible role as an intermediate in the mechanism of demethylation. More recent evidence most hmC is actually stable in genomic DNA, rather than merely being a transient species. Given that hmC is particularly enriched in promoters and gene bodies of actively transcribing genes, hmC is considered an epigenetic mark distinct from mC. Contrary to mC which is produced upon replication, hmC is produced on new DNA over 30 hours in cultured cells. The timing of mC oxidation during cellular proliferation is thought responsible for reduced levels of hmC in genomic DNA, such as those observed during tumorigenesis. hmC evidently acts in epigenetic regulation, stem cell development, and cancer. by the epigenetic regulatory proteins belonging to the TET (ten-eleven translocation) family of α-ketoglutarate-dependent deoxygenases. The TET enzymes are responsible for much of the cytosine specific modifications. TETs catalyze the progressive oxidation of 5-mC through 5-carboxylcytosine (5-caC), which eventually leads to decarboxylation. TET2 is a known tumor suppressor and is frequently inhibited in cancer cells by  loss of function mutagenesis and competitive inhibition by a 2-hydroxyglutarate.

Methylcytosine could get transformed into thymine which might become a pathogenic SNP or mutation but possibly TET's action leading to hydroxymethylcytosine could prevent such mutations (computationally, i hypothesized a related concept in http://www.academicjournals.org/article/article1379937955_Kannan.pdf)