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It's understandable that this is added as a precaution against dishonest sparrers who use connection tampering to gain an unfair advantage, however bear in mind that this will also affect players who don't spar at all.
There is also the issue that the iOS and Google Play App Stores require apps to ask the users for permission before collecting location data (this covers all forms of location detection, whether by GPS or IP). This feature being a server-side addition may be seen as a circumvention to this rule and could be in violation of store regulations. It also doesn't help that the player's location is publicly visible on their profile and there is no option to disable that. While knowing someone's country of residence isn't usually dangerous, some may still see it as a form of privacy invasion.
Maybe there could be a way to detect if a player's IP or connection location changes frequently and abnormally, but only visible to staff members instead of publicly?
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Go through the settings on an iphone and you will see that your location is being sent to apple 24/7. There is no privacy and we'll have less and less as days pass by