US Treasury proposes outbound-investment controls for six technology sectors

On October 22, the U.S. Treasury Department proposed an update to the Outbound Investment Security Program. The proposal would require notice for some U.S. investments and prohibit others involving covered foreign persons in sensitive technology sectors. If adopted, it could change compliance requirements for U.S. investors.

The regulations would implement the Comprehensive Outbound Investment National Security Act, or COINS Act, across six technology categories: semiconductor technologies and microelectronics, artificial intelligence systems, quantum information technologies, high-performance computing and supercomputing, hypersonic systems, and biotechnology. The first five appear in the statute. Treasury added biotechnology under its authority to identify additional qualifying categories through notice-and-comment rulemaking.

U.S. persons would have to notify Treasury about certain covered transactions involving notifiable technologies, while transactions involving prohibited technologies would be barred. Treasury said the rule would also address obligations for controlled foreign entities, the definition of a covered foreign person, notification contents, confidential submissions, a knowledge standard, pre-transaction inquiry, violations and penalties.

Treasury’s release uses “super intelligence systems” to describe proposed technical specifications, but calls the statutory sector “artificial intelligence systems.” The NPRM sets detailed draft technical thresholds for determining which AI and computing activities fall into notifiable or prohibited categories. Those thresholds remain subject to public comment and could change before Treasury issues a final rule.

Under the statutory framework, covered transactions can include equity or contingent-equity acquisitions; debt with equity-like financial or governance rights; joint ventures; conversions of debt or contingent equity into equity; and greenfield or other asset development in a country of concern. The framework can also reach U.S. persons who knowingly direct covered transactions by foreign persons and certain limited-partner interests in non-U.S. pooled investment funds, subject to implementing regulations.

The law defines countries of concern as China, including Hong Kong and Macau; Cuba; Iran; North Korea; Russia; and Venezuela under the Nicolás Maduro regime. It also provides for exceptions or clarification covering categories such as some publicly traded securities and fund investments, small or contractually restricted limited-partner commitments, derivatives, ancillary financing, certain acquisitions and intracompany transfers, ordinary transactions, and transactions completed before December 18, 2025. The implementing details remain subject to rulemaking.

“The proposed regulations are designed to address risks that can arise when foreign adversaries try to benefit from U.S. investment in key technology sectors,” Assistant Secretary for Investment Security Christopher Pilkerton said in Treasury’s announcement.

The existing outbound-investment rules, which took effect January 2, 2025, remain operative while Treasury develops regulations under the COINS Act. Treasury invited comments on the full proposal, including its transaction scope, definitions, notification requirements, penalties and enforcement. Comments are due December 7, 2026. Treasury will consider them before issuing final regulations that set the effective date.