What is a network fee?¶

A network fee is an amount paid to have a cryptocurrency transaction processed or recorded by the relevant blockchain network.

Avoid the dangerous assumption¶

The dangerous assumption is that the fee identifies the recipient, proves a service charge or forms part of the amount transferred to the destination address.

The fee is normally separate from the value sent to the recipient.

It may be paid to miners, validators or another network mechanism, depending on the blockchain.

Fees can vary according to network demand, transaction complexity, urgency and technical rules.

On some networks, the fee is paid in the native asset even where the transaction transfers a different token.

For example, a token transfer may require a fee in the network’s own cryptocurrency.

Preserve the transaction hash, network, transferred amount, asset and fee separately.

Do not add the fee to the recipient amount unless the investigative question specifically concerns the sender’s total cost.

A high fee does not automatically indicate concealment or criminality.

A low fee does not mean the transaction was insignificant.

Providers may also charge separate exchange, withdrawal or service fees that do not appear as the blockchain network fee.

Ask the exchange or wallet provider to distinguish its own charges from the on-chain fee.

The fee may help identify the transaction structure and reconcile wallet or exchange records.

It does not identify who authorised the transfer.

When reporting, distinguish recipient value, network fee, provider fee and any currency conversion.

Operational takeaway¶

Record network fees separately from transferred value and provider charges so the transaction amount, sender cost and recipient value are not confused.