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It doesn't make sense not to if the purpose of gender marker on identity documents is truly for the purpose of identification. If the person has breasts and wears a dress, but has an M on their document then the field becomes useless.
My preference would be to eliminate the gender/sex field altogether as it has never properly worked for intersex people who sometimes biologically don't conform. And considering most IDs have pictures these days and how fashion changes over time, like that women in most cultures are now allowed to wear pants, it is outdated anyway without invasive pat downs, strip searches, or x-ray machines to verify genitals. And what use is that really.
Maybe I'm biased because I'm both agender and stuck with all three different markers on various documents due to the prejudices in the US. But it seems like it's pretty useless anyway, so let's drop it.