Why was there this law in the first place?

In Europe at least, it was often explained as "same-sex marriage and parenthood are not allowed, and a legal gender change cannot be a loophole to that". But it appears to be a post-hoc rationalisation since the forced sterilisation programmes have many more targets in the past until it was progressively abandoned for more and more groups. It was also becoming untenable since more and more countries were legalising same-sex parenthood.

So, if we are being more honest, it's eugenics.