"The provision of identity lies at the heart of a modern state"
Lies at the heart of totalitarian states. All other states leave it to the people to find their own identities.
What strikes me when I see phrases like this, is that what we are talking about here are personalities, nothing more, nothing less. And why would any state get involved in that?
And if they mean identity documents, we don't need to enshrine self-declaration of sex in law to be able to do that. The state already issues all kinds of identity documents on proof of whatever is relevant. This is the only issue where people demand that the state issue identity documents to all entirely without proof of identity.
At the heart of modern states, however, lie law and order. This demand bodes ill for either (as the European Court of Human Rights agreed in 2017).