I can confirm that the crypt parameter without pass= set isn't working in Ubuntu 16.04. At least in the cloud images that I've tested.
I tried it on a freshly launched Ubuntu 14.04 instance and had no problems setting overlayroot=crypt:dev=/dev/vdb and getting everything as expected including logging in /dev/.initramfs/${MYTAG}.log.
Then I did the same thing on a fresh Ubuntu 16.04 instance and couldn't use the same overlayroot=crypt:dev=/dev/vdb to get the expected result. Then I just tried overlayroot=/dev/vdb, without encryption, after creating a filesystem on the extra volume and that worked, but I still don't get any logging.
I can confirm that the crypt parameter without pass= set isn't working in Ubuntu 16.04. At least in the cloud images that I've tested.
I tried it on a freshly launched Ubuntu 14.04 instance and had no problems setting overlayroot= crypt:dev= /dev/vdb and getting everything as expected including logging in /dev/.initramfs /${MYTAG} .log.
Then I did the same thing on a fresh Ubuntu 16.04 instance and couldn't use the same overlayroot= crypt:dev= /dev/vdb to get the expected result. Then I just tried overlayroot= /dev/vdb, without encryption, after creating a filesystem on the extra volume and that worked, but I still don't get any logging.