All Bitcoin transactions can be seen on the blockchain and be tracked from the person who bought or sold on a KYC exchange.
This is not exactly true.
For example, you can look at all transactions but you have no way of knowing what 99% of them are, where they come from or who they belong to. The governments have to also either have access to the exchange database or ask for that information to know the link. On top of all that, not all coins come from exchanges with KYC attached, a lot of the transactions are peer to peer like when you purchase a good from a shop and pay them with bitcoin there is no KYC involved.