Texture color encoding (sRGB) issue

There seems to be a regression with linear textures (commonly for multi-channel masked textures) in UE5.4. Setting the "Encoding Override" (under Texture > Advanced > Source Color Settings) to "Linear" shows different colors on UE 5.4 vs UE 5.3. The colors seem to match up much closer when setting the Encoding Override to Linear in
UE 5.3 and to sRGB in UE 5.4

• Open a Third Person Project Template project in UE 5.4 and one in 5.3
• Find the texture T_Manny_02_CCRCCPlastic_MSK and open it
• there are visible differences in the texture between both engines
• Run the game in both engines and notice the issues when seeing the mannequin from up close with mask properties such as Roughness and Metallic.