Advising a Municipal Official on "Tourism × Web3": Five Issues We Mapped Out First

Tomohiro Iida · Published June 6, 2026

For Web3 projects in local government, mapping out five issues — budget cycle, assumptions about subsidies, legal scope, whether it can be explained to residents, and exit criteria — before getting into technology choices tends to produce an implementation plan that is easier to explain to the council, residents, and other departments. The case for adopting Web3 at all should start not from "it is technically new," but from whether it offers value that residents, tourists, and local businesses can genuinely accept.

The situation (anonymized)

An official from a municipality's tourism-promotion department consulted with us about an idea: recording tourists' visit experiences as NFTs to drive repeat visits and grow the "relationship population" (people with an ongoing connection to the area beyond simple tourism). They were looking at neighboring municipalities' examples and exploring whether this could be worked into next fiscal year's budget.

As we talked it through, it became clear that beyond the technology, there were issues worth sorting out in advance: how to explain the plan to a superior, the finance department, the council, and residents before the budget is finalized; whether to build around an assumed subsidy or a standalone budget; and how to respond if concerns come up about tourists' behavioral data or personal information.

Tourism NFT and Web3 initiatives are not complete just because you build an app and a smart contract. Running this as a municipal project means shaping it into something workable across budget, regulation, legal review, accountability, and the decision on whether to continue.

Five issues we mapped out in the first session

Issue 1 — a project plan that fits the budget cycle

Because municipal budgets are set on an annual cycle, the first things worth confirming are when to submit a budget request and which fiscal year to assign the pilot phase versus the full-rollout phase. Rather than aiming straight for full deployment, staging the tourism Web3 initiative like this tends to make it easier to explain both inside and outside city hall:

• Current year: research, requirements definition, resident briefing, small-scale pilot
• Following year: an expanded pilot informed by the first results
• The year after: full rollout, or redirect the learnings into a different initiative

Assuming "full rollout starting next fiscal year" can leave too little time for the budget request, internal coordination, council briefing, and procurement process. In municipal projects, confirming the budgeting and accountability schedule early — not just the development schedule — helps keep the plan realistic. There is also the option of combining a supplementary budget or national/prefectural grants with the initial budget, though a supplementary budget depends heavily on each municipality's circumstances, so it is safer to check with the finance department and other relevant departments early.

Issue 2 — designing the project around subsidy assumptions

Tourism Web3 initiatives can be eligible for subsidies or grants under frameworks such as regional revitalization, tourism DX, growing the relationship population, boosting local consumption, smart cities, or digital implementation.

That said, program names and subsidy rates change year to year. For example, an area that was once described under the "Digital Garden City Nation Vision Grant" may now be organized under a different framework, such as the "New Regional Economy and Living Environment Creation Grant." In articles and proposals, it is safer not to lock in a specific program name too firmly, and to phrase things on the assumption that current application guidelines will need to be confirmed.

If a subsidy is being used, confirm the following in advance:

• Is the applicant the municipality or a private-sector operator?
• Do the eligible expenses cover system development, operating costs, publicity costs, and expert fees?
• What are the subsidy rate, the cap, the decision timing, and the project completion deadline?
• Is effect measurement or KPI reporting required?
• Who bears the ongoing running cost once the subsidy period ends?

The point most worth checking is whether the outcome metrics the subsidy requires line up with what the municipality actually wants to achieve. Focusing too much on winning the subsidy can end up prioritizing how the application looks on paper over the actual value to residents and tourists.

A subsidy is an effective way to lower upfront cost, but it is not the purpose of the project itself. Confirming early on whether there is a reason to continue once the subsidy runs out matters.

Issue 3 — sorting out legal scope in advance

The main legal issues to watch for with a tourism NFT are:

• Personal information protection and privacy — tourist attributes, location data, behavioral history, wallet addresses, survey responses, and similar data
• Premiums and Representations Act — whether NFTs or perks distributed count as a "premium," and how the offer and conditions are represented
• Payment Services Act — whether the NFT or token could count as a means of payment, a prepaid payment instrument, or a crypto-asset
• Financial Instruments and Exchange Act — whether profit-sharing, investment character, or expectations of secondary-market appreciation are being emphasized
• Contracts and terms of use — what rights an NFT holder actually has, whether it can be transferred, conditions for expiry, and whether perks can be changed

One thing worth being careful about here is not asserting blanket statements like "an NFT represents ownership, so it is not a financial product." A typical commemorative or participation-proof NFT can often be designed in a way that does not fall under financial-product or crypto-asset regulation, but depending on the design, some setups may need review under the Payment Services Act or Financial Instruments and Exchange Act.

For example, the following kinds of designs need careful review in advance:

• An NFT that can be used as payment at local shops
• An NFT that heavily promotes convertibility or secondary-market gains
• Distributing sales or profit shares to NFT holders
• Combining an NFT with points, gift certificates, or a stablecoin
• Retaining individually identifiable location or behavioral data long-term

For an initial explanation to a municipality, rather than saying "it's an NFT, so it's safe" or "it's an NFT, so it's outside regulation," it is more reassuring to relevant parties to frame it as: "we are limiting the use case to tourism souvenirs, proof of participation, and visit history, and not building in payment character, investment character, or excessive convertibility — and we will confirm with legal counsel where needed."

The final legal determination needs to be confirmed with a lawyer or the relevant authority. Still, narrowing down the range of risk in this first round of issue-mapping makes the subsequent legal consultation easier to move forward.

Issue 4 — the groundwork for explaining it to residents

In municipal projects, what matters is not just whether something is technically feasible, but whether it can be explained to residents.

For tourism × Web3, it helps to be able to explain the following points without relying on jargon:

• Why use Web3 instead of a regular app or database
• What benefit residents get
• What experience value tourists get
• What benefit local businesses get in terms of customer referral, repeat visits, and purchases
• How far personal or location data is collected, and what it is used for
• How this differs from crypto-assets, investment, or speculation
• At what point the project would be reconsidered if it does not go as expected

Residents and council members may well ask questions such as "how does Web3 relate to crypto-assets," "is there a hacking risk," or "is there a point in running a pilot with taxpayer money." It matters to have these translated into language suited to an administrative document rather than technical jargon.

Possible framing for the explanation includes: recording tourists' visit experiences digitally to encourage repeat visits and regional circulation; the municipality using consent-based, aggregated usage data to improve the program rather than tracking individuals; and putting it to use for referring customers to local businesses and building the relationship population.

That said, a phrase like "returning control of tourists' behavioral data to the tourists themselves" can overstate the design in some cases. If the actual design does not give users real control over their own data, a more careful phrasing is advisable.

For explaining this to residents, it matters more to be clear about the following than to emphasize how cutting-edge the technology is:

• What is not collected
• What is anonymized or aggregated
• Who manages the data
• How many years it is retained
• Whether residents or tourists can opt out, request deletion, or make an enquiry

For a municipal Web3 initiative, being explicit about what it will not do, not only what it can do, tends to reduce concern among the people involved.

Issue 5 — exit criteria and next-fiscal-year decisions

It is easier to explain if exit criteria for the pilot phase are defined in advance, aligned with subsidy requirements and the internal decision for the next fiscal year. For tourism × Web3, possible metrics for exit criteria include:

• Number of participants
• NFT claim rate
• Tourist satisfaction
• Intent to revisit
• Number of customers referred to local shops
• Perk redemption rate
• App retention rate
• Number of enquiries, drop-offs, or issues
• Staff hours spent on operation
• Cost per participant acquired

One point worth being careful about here: a high participant count does not necessarily mean success. As a tourism initiative, it needs to be assessed together with regional circulation, intent to revisit, effect on local businesses, whether it can be explained to residents, and operational load.

If the pilot results fall short of the criteria set in advance, not proceeding to full rollout — and instead applying what was learned to a different initiative — is also a legitimate option. Documenting exit criteria in advance makes it easier to give a quantitative answer to the council or finance department when they ask, "are you continuing this next year too?"

For a municipal project, deciding on exit criteria is not a negative or defeatist decision. Since taxpayer money is involved, being able to explain "under what conditions we would reconsider, if things do not go as expected" is part of what builds trust in the project.

Three common misconceptions

Misconception 1 — if another municipality has done it, we can adopt it too

Other municipalities' examples are a genuinely useful reference. But budget cycles, subsidy availability, resident makeup, tourism assets, and how hard it is to explain to the council all differ by municipality, so a case cannot always be transplanted as-is. What matters is not just which municipality did it, but what problem they were solving, with what KPIs, what budget line, and what team — and working out the difference when applied to your own municipality, rather than stopping at the case study itself.

Misconception 2 — winning a subsidy means the project is set

A subsidy is an effective way to cover the initial investment for a pilot phase. It does not automatically solve the running cost, staffing, maintenance, publicity, and support costs of full-scale operation afterward. If a "self-sustaining model" for after the subsidy period is not designed from the start, continuing the project can become difficult once the subsidy ends. For a municipal Web3 initiative, it matters to confirm who bears the running cost in year two and year three, not just the pilot budget.

Misconception 3 — "not using Web3" can never be the right conclusion

A consulting session can genuinely conclude that "a regular database is enough for this use case, not Web3." For example, if a short-term campaign only needs to hand out stamps to participants, a regular app or a QR-code-based stamp rally may be cheaper, faster, and easier to explain. On the other hand, use cases such as proof of participation shared across municipalities, visualizing a long-term relationship population, tamper-resistant proof of visit, or a digital membership that can be carried outside the region are where Web3 becomes worth considering. Deciding based on the value to residents, tourists, and local businesses — rather than starting from the technology — leads to a more convincing conclusion, whether or not you end up using Web3.

What happened after

In this case, once the five issues were documented, the official moved on to preparing explanatory material for their superior, the finance department, the council, and residents, in that order. On the subsidy side, they decided not to commit to any specific program name, and instead to keep checking the latest national and prefectural frameworks as they went.

Rather than jumping straight into development, the current fiscal year was allocated to resident and internal briefings, sorting out the legal issues, and a small-scale feasibility review — with the decision on whether to budget for a pilot in the following year, or fold this into an existing tourism DX initiative, to be made from there.

Q&A

What is the budget scale for a municipal Web3 project?

It varies a great deal by scope. A small-scale study, requirements definition, or informal consulting session can start from the several-hundred-thousand-yen range; a small pilot for a tourism NFT or digital stamp rally is often in the several-million-yen range; and a full-scale build including app development, integration with existing systems, and coordination with local businesses can sometimes exceed JPY 10 million. Figures like "JPY 3-10 million for the pilot stage" or "JPY 10-30 million for full rollout" are only rough guides that depend on scope, and subsidy rates vary by program too, so it is safer not to state a flat "50-80%." In practice, it tends to work better to split the project into three stages up front — research and design, small-scale pilot, and full rollout — and budget each stage separately.

How should we explain the case for using Web3 in tourism?

"Web3 is trending" or "other municipalities are doing it" may not be enough on its own to satisfy a resident or council briefing. What needs explaining is whether Web3 offers value that a conventional app or database cannot easily provide. Use cases worth considering Web3 for include: issuing proof of visit or participation usable across municipalities and operators; letting tourists carry their own visit and participation history; strengthening tamper resistance for certificates and participation records; using regional-circulation and repeat-visit history based on the individual's consent; and building a scheme multiple regions or operators can join under shared rules. On the other hand, for a short-term campaign or a one-off stamp rally, not using Web3 is often cheaper, faster, and easier to explain. Whether Web3 is warranted comes down to whether you need decentralization, tamper resistance, a portable digital certificate, or a shared foundation across multiple parties.

Do you work with municipalities outside Kyoto Prefecture, nationwide?

Yes, we work with municipalities nationwide. Netsujo has been part of the "Chain Up KYOTO" working group since March 10, 2026, but our consulting is not limited to municipalities within Kyoto Prefecture. Meetings are mainly online, with in-person visits available where needed. Budget cycles, council briefing, tourism resources, how to bring local businesses on board, and subsidy strategy differ by municipality, so the first conversation starts not from "which technology to use" but from what you want to achieve, who you need to explain it to, and which fiscal year the decision falls in.