Why may Amazon be interested in NFTs?

The details are fuzzy, but Amazon plans to launch an NFT initiative in the spring, per four anonymous sources who spoke to Blockworks. A spokesperson for Amazon declined to comment, and Fortune was unable to independently confirm the report.

Given the prolonged crypto winter, FTX’s collapse, and even the White House’s recent hostility toward crypto, why is one of the tech industry’s biggest players reportedly now interested in non-fungible tokens?

What’s the plan?

Two sources from the Blockworks report said Amazon is purportedly focusing on blockchain gaming and related NFT implementations, with one saying that the company will focus on encouraging users to play Web3 games that award free NFTs.

The tech giant has already planted its flag firmly in media, creating its own streaming service and television and film studio. “I can easily see them saying, ‘Yeah, we should get into gaming, too,’” Brian Fitizgerald, an Amazon analyst at Wells Fargo, told Fortune.

Amazon does already have its own small gaming studio, and there were rumors in 2022 that it would buy Electronic Arts, one of the largest companies in the space. Its potential entrance into the NFT market may be one more step in expanding its influence in gaming.

But why NFTs?

In 2022, there was no shortage of proclamations about the death of NFTs—and for good reason. By September, trading volume had collapsed by 97% from its peak roughly eight months earlier.

The bottom of the NFT market undoubtedly fell out, but that doesn’t mean it still isn’t worth hundreds of millions of dollars. Sales have creeped upward since October, reaching $900 million in January, according to data from CryptoSlam. 

“If the reports are true, it’s not a surprise that a major Cloud provider like Amazon—who currently hosts the metadata for many popular NFT collections on their servers—would be interested in getting a slice of that pie,” Andrew Tate, the content lead at blockchain analytics firm Nansen, told Fortune. 

Linked with retail?

Tate’s mention of Amazon hosting NFT metadata speaks to the company’s already prominent role in the world of Web3.

Amazon Web Services, the catchall name for the company’s various cloud computing services, is a blockchain computing workhorse, with 25% of all Ethereum workloads running on its servers, according to its website.

And in early January, Amazon announced a partnership with Ava Labs, which created and maintains the blockchain Avalanche, to increase the adoption of Avalanche among businesses, institutions, and even the government.

In addition to Amazon’s rumored entrance into the NFT game market, Fitzgerald, the Wells Fargo analyst, thought it was plausible that the company could link NFTs with its retail business. He imagined a scenario in which consumers would receive a digital token as a certificate of ownership after they bought a physical good.

He can’t see Amazon’s splash into the world of Bored Apes to be dramatic enough to open a crypto or NFT exchange to rival Binance or OpenSea, given all of the regulatory uncertainty and inherent risk surrounding the crypto market. However, the NFT market still brings in hundreds of millions of dollars per month, and Amazon hasn’t shied away from experimenting with blockchain technology.

“If NFTs and the blockchain technology underneath them provide utility in terms of physical good authentication and in accuracy,” said Fitzgerald, “then why wouldn’t Amazon and eBay want to be involved in enabling that technology?”

Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter examining what leaders need to succeed. Sign up here.