Athletes are now categorised by hormone levels (over time) rather than their bits.
http://www.theguardian.com/sport/2016/jan/25/ioc-rules-transgender-athletes-can-take-part-in-olympics-without-surgery
It's a bit surprising, if a transgender Male -> Female athlete never stops training through that exclusion period you would expect them to retain a significant portion of their physical advantage despite losses of testosterone.
I suppose this is coming about because the so called "blood passport" is now effectively becoming a reality for all Olympic and Professional athletes.
I guess we'll see but the protocol has always been those with elevated hormone levels sit out for 2 years. It will be interesting to see the reaction from athletes should they get beaten by a transgender athlete for a medal - especially a gold one which can be worth a million dollars just in grants