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.
Exactly, they cant trace tou unless you will going to reveal yourself. Remember bitcoin was decentralized and they doesnt have control on it and bitcoin was in the cryptoworld. Which is online, they wont find you unless you will give some info like in the transactions so better to be careful for your safety and your bitcoin.