I don't know where it started. I'll be interested if anyone does, though.
And I don't really understand it from a government's point of view. Legally changing your sex is not a minefield.
I do know that treatment, and I'm assuming a legal change of sex, was not considered suitable or appropriate for people identifying as trans on the basis of AGP.
So any gatekeeping came under pressure to be dismantled. Along with a denial that AGP existed.
It's mostly autogynephiles who stick to the I've always been a woman narrative and lose their rag when questioned. And they are the ones complaining the loudest and are anti women.
Being able to legally change sex was sanctioned in 2004. Which then legitimised trans as a movement.
I should imagine every autogynephile in the country started rubbing their hands in glee and saw self identification as something they could promote which would serve the dual purpose of benefiting them and, at the same time, be lauded for a spot of virtue signalling.