Can your government really be able to track if you never declared gains made from Bitcoin transactions?
Your government, like every government in the world is monitoring all bank transactions, that's enough for now. With time and effort, I'm sure a government could also monitor the blockchain, but I guess this isn't a priority as of today. The European Union is already talking about it, though.
The thing is that governments are not monitoring bitcoin transactions so they can not state that you made this much in the given tax year to claim on your FIAT tax form.
If they wanted to then they would be hiring crypto officers to follow these which I do not think they would be able to track each and every transaction anyways.
You think that each government will create own crypto department to audit all these transactions on the blockchain?
An impossible feat I would attest too.