Because the fittest people with an expressed SRY gene (aka "biologically male") are generally 10-15% better at sports than those without it (aka "biologically female") so if you allow SRY-expressing MtF transgender people to compete in the female category against non-SRY cisgender female people (rather than only letting them competing in the male category), and there are enough of them at top levels, no cisgender woman will ever win anything.

Also, this incentivizes male athletes that can't win medals but are close to take hormone replacement theory solely so they can compete in the much easier female category and win medals, which runs in the same arguments against doping.

On the other hand, if you don't, then MtF transgender people are not likely to win anything, since hormone replacement therapy reduces performance (but not enough to match non-SRY people).