MacPro M1 - upgraded yesterday to Sequoia 15.3.2 - thought I had the same problem.
After much experimenting turns out Touch ID is very sensitive to electrical noise. I'd plugged my USB C power cable into a power supply that was not the one supplied with the Mac. Its for charging a powerbank.
I'd noticed my mouse jittering. Suspected electrical interference. Inspected the power and realised it wasn't plugged into the Apple one.
Switched to Apple supply and Touch ID sprang back into life.
This after I'd deleted and attempted to redo Touch ID fingerprints. Adding new ones, they would most remain blank with occasional lines appearing.
Clean power resolved a couple of hours of frustration.
Cautionary tale though. I've not seen this mentioned in the dozens of articles I've trawled through today, looking for clues.