It's mentioned their species previously had male/female gender distinction, but no longer does, both physically and what's socially acceptable to express. They're also aware of other alien species who have gender distinction.

The main issue in the story is a character from the alien species is having a romance with a human in a very gendered way, so that's what ends up being criminal. Other people have mentioned, but this story was probably supposed to be an allegory about homosexuality rather than gender itself.