Loss of 5-methylcytosine alters the biogenesis of vault-derived small RNAs to coordinate epidermal differentiation.

The presence and absence of RNA modifications regulates RNA metabolism by modulating the binding of writer, reader, and eraser proteins. For 5-methylcytosine (m5C) however, it is largely unknown how it recruits or repels RNA-binding proteins. Here, we decipher the consequences of m5C deposition into the abundant non-coding vault RNA VTRNA1.1. Methylation of cytosine 69 in VTRNA1.1 occurs frequently in human cells, is exclusively mediated by NSUN2, and determines the processing of VTRNA1.1 into small-vault RNAs (svRNAs). We identify the serine/arginine rich splicing factor 2 (SRSF2) as a novel VTRNA1.1-binding protein that counteracts VTRNA1.1 processing by binding the non-methylated form with higher affinity. Both NSUN2 and SRSF2 orchestrate the production of distinct svRNAs. Finally, we discover a functional role of svRNAs in regulating the epidermal differentiation programme. Thus, our data reveal a direct role for m5C in the processing of VTRNA1.1 that involves SRSF2 and is crucial for efficient cellular differentiation.We thank everybody who provided us with reagents, in particular we thank James Stevenin for sending us recombinant SRSF2. We gratefully acknowledge the support of all the WT-MRC Stem Cell Institute core facility managers. This work was funded by Cancer Research UK (CR-630 UK) and the European Research Council (ERC). Parts of this research in Michaela Frye's laboratory was supported by core funding from Wellcome and MRC to the Wellcome-MRC Cambridge Stem Cell Institute. Juri Rappsilber’s laboratory was supported by Wellcome Trust Senior Research Fellowship (084229). Gracjan Michlewski’s laboratory was supported by the MRC Career Development Award (G10000564), Wellcome Trust Seed Award (210144/Z/18/Z) and Wellcome Trust Centre for Cell Biology Core Grants (077707 and 092076). Abdulrahim Sajini was supported by a scholarship from the University of Tabuk and Khalifa University of Science and Technology Faculty start-up award number FSU-2018-01. Rebecca Wagner was supported by the Wellcome Trust PhD Programme in Stem Cell Biology & Medicine