Touch ID Stopped working on MacBook

You need to reset your secure token.

sysadminctl -secureTokenStatus mlr
sysadminctl -secureTokenOff mlr -password - -adminUser Manamana -adminPassword -
sysadminctl -secureTokenStatus mlr
sysadminctl -secureTokenOn mlr -password - -adminUser Manamana -adminPassword -
sysadminctl -secureTokenStatus mlr

On a Mac, a Secure Token is a crucial account attribute that enables users to perform specific, system-level operations, particularly those related to FileVault encryption and system security. It's essentially a permission that allows a user to manage and decrypt encrypted data on the Mac.
Here's a more detailed explanation:

Purpose:

Secure Tokens are used to authorize users to manage FileVault, which is Apple's built-in encryption feature. This includes enabling and disabling encryption, as well as decrypting the system drive.

Refer: https://macpaw.com/how-to/mac-authentication-disabled#:~:text=If%20you%20see%20the%20error,an%20issue%20with%20iCloud%20Keychain.