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?
By tracking some bitcoin addresses that are still active in their country it's easy. Because now it's easy to track IPs someone is who used bitcoins. And in the end you will be caught because you also already know that bitcoin is banned in your country.
Yes, there is some way that bitcoin transaction being tracked back. Everyone can see the transaction, after all. That's why what so-called "privacy coin" exist. They provide better transaction system that untraceable, for example, is monero. You can break the chain of bitcoin transaction to monero and back to bitcoin. You can use Shapeshift. If you do it, there is no chance that government know that you have bitcoin.