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?
There is a possibility that government can trace your BTC if ever they will enter your wallet. But I do not think it will happen because if they make that, they violate your rights to property. However, I don't think they can trace your BTC because transaction in a blockchain is anonymous and no one can detect where your transaction goes on.