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?
It it not possible to the government to trace that you are a bitcoin users. There is a lot of software they can used to do it. Well, It depends on your case if they will arrest you and punish you to prison. It depends on what law covered this kind of activity. But I am hoping that it could not happen so we are free to work on bitcoin.