I don't think it's wrong for them to require that somebody medically transitions before being able to play on sports teams that correspond with their gender identity. It feels fair. Both to the trans athletes and the cis athletes. A happy medium that isn't disrespectful to either party, and is inclusive.
In the case of MtF though, I think it's only necessary that they be on blockers for a year. Doesn't necessarily have to be blockers and estrogen concurrently for a year. The blockers will do enough to bring them closer in line with the athletic ability of a cis girl of their stature and fitness level.
For FtM, I think the requirement could be more lax. Maybe T for just 6 months first, and even then, they wouldn't have any advantages over their cis male counterparts. Maybe the 1 year requirement for them is for their (the trans boys') own safety?
Either way, it's a great step forwards.