How can the government discover I own BTC, let's say I'm from Venezuela where crypto is banned, what they can do to discover and arrest me?
Bitcoin transactions are anonymous. As long as you don't reveal your identity, no one know you are a bitcoin holder.
For this purpose you have to buy bitcoin peer to peer from a person you trust. Never use exchanges that force you to verify your identity.
Yeah i agree bitcoin holders are hard to trace of the government authorities because or their anonymous currency, di not use exchange asking kyc, kyc is tracing the involvement of cryptocurrency holders to protect about anti money laundering law.