Magic keyboard only works when plugged in

Hello, my magic keyboard with touch id does not work with my mac air 10.15.7. When I plug it it, it works immediately, but I can't see it in bluetooth. I tried using it with other mac and it pairs just fine. But when I try it with my Air it just does not work. The bluetooth is on, because my magic trackpad works just fine.

Also fn buttons do not work in this mode, like adjusting brightness or so on. Like it works like a regular keyboard and not a magic keyboard.