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.

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  crypt:dev=/dev/vdb parameter does not work with randomly generated

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