Components with Drag and Drop Asset property not working on my Experience Fragment

I am trying to use a custom Image component where the image should be dragged and dropped on to the dialog in my Experience Fragment. The issue is that every time I configure the image, the image disappears from the dialog but when checked in crx, the fileReference property is getting appended with some characters as shown in the image. Any suggestions please?

The same component works fine on pages created using other templates, I am facing this issue only on my Experience Fragment.