Why is my application icon not transparent?

In XAML, I am attempting to bind the window/application icon to an icon on the file system.

In Window.xaml

Icon="{Binding ApplicationIcon}"
 

In AppViewModel.cs

public ImageSource ApplicationIcon
 {
   get
   {
     return new BitmapImage(new Uri(pathReadFromConfigFile));
   }
 }
 

When I do this, the icon is shown but it is not transparent. However, if I set the icon within the project (not using binding), the icon is added to the project and it is transparent when I start the application. Why is it acting differently between these two scenarios?

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