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?
The government will gonna trace you if you are a bitcoin holder though exchanges. As we all know that bitcoin is anonymous and a peer to peer thransactions. But in some other way if you invest other kind of alternative coin ithat needs middlemen to complete transactions that will require you a kyc , your identification card and passport while converting cryptovurrencies into cash. In that way they can trace you if you owned such a bitcoin.