Are you sure you are running 6.3.1? This issue was fixed in ConfD's builtin SSH server over 2 years ago, in ConfD-6.1.1 and latest releases for older branches, and ConfD-6.2 and all later versions have the fix. Just to make sure, using OpenSSH-7.6p1 I now verified that ConfD-6.1 has the problem, while 6.3.1 does not. Perhaps you can share the output of
ssh -v ... for a connection that exhibits the problem?
Below is the CHANGES note from ConfD-6.1.1 (released in January 2016, more than a year before RFC 8160 was published, at the point in time when some OpenSSH variants started to use this flag without any support from the then-current standard RFC 4254).
- confd: If an SSH client sent the non-standard opcode IUTF8 (42) in a
pty-req channel request towards the built-in SSH server, the connection
would go down. This has been fixed.