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.
Well here in our country we use the local exchange for the safety of our fiat money to exchange to crypto so we have to identify ourselves and in return there are market transaction fee being deducted if our fiat money will be exchange and this is where the government could identify us that we are holding bitcoin or any other crypto and could apply tax on it in the form of transaction fee every time that trading happen.