It was never a problem before a vocal minority declared it a problem of some sort.
Yes, it is a small group of conservatives who have declared it a problem. Otherwise it ain't been a problem for years.
So, I sincerely don't know the timeline of how this became such an issue. I know that starting a couple of years ago, several conservative states passed laws that criminalized use of bathrooms by transgenders, no matter how passable they were for that gender or how accepted they were in that bathroom.
OTOH, I get the sense that such laws were themselves reactions to various incidents happening in schools. It really all comes down to schools. Everyone at school knows what kids are transgender, because they are around them all the time. Even, externally "convincing" transgenders are known. Thus, whenever they enter the bathroom of their non-biological sex, all the females in their know that a biological male is in there with them. I get the sense that it was actually transgenders and their advocates who ignited the issue by pushing for transgenders using female restrooms in schools (the vast majority are M to F), where it is inherently an issue because of the larger social context in which the biological sex of the transgender is well known and all the students involved have daily interactions, and the bathrooms are commonly used for changing and primping, and things that expose oneself. Plus, in several places transgenders have pushed to have the transgender with full male anatomy change along side biological girls.
It is not just conservative politicians reacting to that, but the girls themselves, many (if not most) who feel as or more uncomfortable with that as the transgender does using the bathroom or locker corresponding to their biological anatomy. It is perfectly legit to question why the psychological comfort of a transgender should trump the psychological comfort of numerous young girls, who are not being bigots but just having natural insecurities and emotional reactions about exposing themselves in front of biological males and being exposed to male genitalia, no matter what type of underwear is being taken off to expose it.
Conservatives are making the wrong arguments and most are likely just reacting based on bigoted fears. But there is a very legit basis to doubt the reasonableness, ethics, and fairness of forcing biological females to defecate and get naked in the same room as biological males. It is no more bigoted or intolerant of the females who object than it is bigoted or intolerant for the transgender to not want to use the room that males use.
The blindness of so many on the left to such legit concerns and the psychological welfare of young women on this issue is just part of their general ideology that the only struggles, preferences, or concerns that matter are those of people who belong to non-majority categories.