The United States is taking new steps to protect its national security by controlling certain investments made by American individuals and businesses in foreign countries. These investments can provide companies with much more than money. They can also provide access to advanced technology, technical knowledge, business connections, research capabilities, and management experience. When these advantages help another country develop technologies that could be used for military operations, intelligence gathering, surveillance, or cyberattacks, the investment may create national security concerns. The US government has therefore developed a framework known as the Outbound Investment Security Program. The program focuses on certain American investments connected to sensitive technologies in countries identified as national security concerns. The original regulations were issued by the US Department of the Treasury in October 2024 and became effective on January 2, 2025. The program initially focused on semiconductors and microelectronics, artificial intelligence, and quantum information technologies involving China, Hong Kong, and Macau. The policy has since moved into a new legislative phase. On December 18, 2025, Congress enacted the Comprehensive Outbound Investment National Security Act, commonly known as the COINS Act, as part of the National Defense Authorization Act for Fiscal Year 2026. On October 22, 2026, the Treasury Department announced proposed regulations to implement the new law. These proposed regulations would expand the existing framework to cover additional technology sectors, including high performance computing, hypersonic systems, and biotechnology. The proposed framework also addresses artificial intelligence, semiconductor technology, and quantum information technologies. The Treasury Department is seeking public comments before issuing final implementing regulations. The announced deadline for comments is December 7, 2026. Until the new regulations take effect, the existing rules remain applicable. These developments are important for investors, technology companies, venture capital firms, financial institutions, and international businesses. They also highlight the growing connection between economic policy, international investment, technological competition, and national security. This article explains the new outbound investment rules, the COINS Act, the technologies covered, the potential effects on American businesses, and what investors should understand about the changing regulatory environment. What Are Outbound Investment Rules Outbound investment means money invested by individuals, companies, or other organizations from their home country into businesses or assets located in another country. For example, an American investment company might provide funding to a semiconductor manufacturer operating overseas. An American venture capital firm might invest in a foreign artificial intelligence startup. A technology company might establish a joint venture with a foreign business to develop advanced computing systems. These investments can support economic growth, create employment, and encourage technological innovation. However, investment can also transfer valuable knowledge and capabilities across national borders. A company receiving investment might gain access to advanced engineering methods, specialized equipment, research teams, commercial networks, and experienced technical personnel. These resources can help the company develop products more quickly than it could using its own resources alone. The US government is concerned that certain foreign entities could use these advantages to develop technologies that support military modernization, intelligence operations, surveillance systems, or other activities that threaten American national security. Outbound investment rules are designed to address these risks. Unlike traditional foreign investment screening, which generally examines investments entering the United States, outbound investment rules focus on certain investments moving from the United States into foreign businesses. The rules do not prohibit every American investment in a foreign country. Instead, they identify specific transactions, technologies, entities, and circumstances that may require notification or may be prohibited. The central objective is to prevent sensitive American capital and associated technological advantages from supporting activities that could undermine US national security.
United States Is Strengthening Investment Controls
The United States has long encouraged international investment because businesses benefit from access to global markets. American companies invest overseas to expand production, reach customers, reduce costs, develop new products, and establish partnerships with international businesses. Foreign investment can also strengthen relationships between countries and encourage economic cooperation. However, governments increasingly recognize that some technologies have both civilian and military applications. This creates a difficult policy challenge. A technology developed for a commercial purpose may eventually be used in military equipment, advanced surveillance systems, intelligence gathering, or cyber operations. For example, advanced computing technology can support scientific research and commercial services. Similar computing capabilities may also be useful in military planning, intelligence analysis, and weapons development. Artificial intelligence can help businesses improve customer service, analyze data, and automate routine tasks. Advanced AI systems may also support military decision making, surveillance, and sophisticated cyber operations. Semiconductors are essential components in consumer electronics, automobiles, telecommunications equipment, data centers, and advanced military systems. Because these technologies are important to both the civilian economy and national defense, the US government wants to prevent certain investments from helping foreign entities develop sensitive capabilities that could threaten American interests. The outbound investment framework reflects a broader shift in economic policy. Governments increasingly consider the national security implications of capital flows, technology transfers, supply chains, and international business relationships. The challenge is to protect national security without unnecessarily restricting legitimate business activity. Understanding the Comprehensive Outbound Investment National Security Act The Comprehensive Outbound Investment National Security Act, or COINS Act, represents a major development in the US approach to outbound investment regulation. Congress enacted the law on December 18, 2025, as part of the National Defense Authorization Act for Fiscal Year 2026. The legislation establishes a statutory foundation for regulating certain American investments in foreign entities involved in sensitive technologies. It builds on the Outbound Investment Security Program that became effective in January 2025. The law directs the Treasury Department to develop regulations that distinguish between investments requiring notification and investments that are prohibited. It also identifies several technology sectors that can be covered by the regulatory framework. These include semiconductor technologies and microelectronics, artificial intelligence systems, quantum information technologies, high performance computing and supercomputing, and hypersonic systems. The Treasury Department's October 2026 proposed regulations also include biotechnology. The proposed regulations explain how the government intends to implement the law and define the transactions, technologies, and foreign entities that may fall within its scope. However, it is important to distinguish between the law itself, the existing regulations, and the proposed new regulations. The existing regulations became effective in January 2025 and remain in force while the Treasury Department develops the final rules under the COINS Act. The October 2026 regulations are a proposal rather than a final rule. Their precise requirements may change after the government reviews public comments. Businesses should therefore avoid assuming that every proposed provision is already legally effective. What Is the Outbound Investment Security Program The Outbound Investment Security Program is administered by the US Department of the Treasury. It was established to implement restrictions on certain American investments involving sensitive technologies and entities connected to countries of concern. The program was originally developed following Executive Order 14105, issued on August 9, 2023. The Treasury Department issued the final implementing regulations on October 28, 2024. Those regulations became effective on January 2, 2025. Under the original framework, certain transactions were prohibited, while other covered transactions required notification to the Treasury Department. The program does not operate as a general government approval system for every American investment abroad. Instead, investors and businesses must determine whether a proposed transaction falls within the regulatory definitions. A transaction may be prohibited, subject to notification, exempt from the rules, or outside the program's scope. This distinction is important because a company cannot determine its obligations simply by asking whether it plans to invest in China or another foreign market. It must also examine the nature of the investment, the identity of the relevant entities, the technology involved, and the applicable regulatory definitions. The Treasury Department has published official guidance and frequently asked questions to help businesses understand the program. Which Countries Are Covered by the Original Rules The original Outbound Investment Security Program identified the People's Republic of China, including Hong Kong and Macau, as a country of concern. The rules were designed to address specific national security risks associated with investments in certain sensitive technologies and entities connected to those jurisdictions. However, the geographical scope of outbound investment regulation is an area that businesses must monitor carefully. The COINS Act creates a broader statutory framework, and the October 2026 proposed regulations address changes required to implement the legislation. The proposed regulatory framework should be examined alongside the relevant statutory definitions and official Treasury guidance to determine which countries, foreign persons, subsidiaries, and other entities fall within its scope. Businesses should not automatically assume that every company headquartered in a covered jurisdiction is subject to identical restrictions. The legal analysis can depend on ownership, control, business activities, transaction structure, and other factors defined in the applicable regulations. For international companies, this means that understanding corporate ownership and business relationships can be just as important as identifying the country in which a company operates. The Five Major Technology Areas Under the New Framework The COINS Act identifies several strategic technology sectors for regulation. The Treasury Department's October 2026 proposed regulations also address biotechnology. The exact technical definitions matter because not every product, service, or business activity within these broad industries will necessarily be covered. 1. Semiconductor Technology and Microelectronics Semiconductors are essential components of modern technology. They are used in smartphones, computers, automobiles, telecommunications equipment, industrial machinery, medical devices, data centers, and military systems. Advanced semiconductor chips can process large amounts of information at high speed while consuming relatively little power. They are especially important for artificial intelligence, high performance computing, advanced communications, and sophisticated defense applications. Developing advanced semiconductors requires substantial investment, specialized engineering knowledge, sophisticated manufacturing processes, and access to advanced equipment. The US government is concerned that certain investments could help foreign entities develop semiconductor capabilities that contribute to military modernization or other sensitive national security activities. Under the original outbound investment rules, certain investments involving specified semiconductor activities could be prohibited, while other covered transactions could require notification. The COINS Act framework continues to treat semiconductor technology as a key area of concern. For investors, this means that the description of a company's business may not be sufficient to determine whether an investment is covered. A business that describes itself as a general technology company may also develop specialized chips, semiconductor manufacturing capabilities, or other technologies that fall within the regulatory definitions. Investors may need technical information about the company's products, manufacturing processes, research activities, and intended applications. 2. Artificial Intelligence Systems Artificial intelligence has become one of the most important technology sectors in the global economy. AI systems are used in healthcare, finance, manufacturing, education, logistics, software development, scientific research, and customer service. Businesses use AI to analyze large datasets, automate repetitive work, recognize patterns, improve forecasting, and support decision making. However, advanced AI capabilities can also have national security applications. AI may help analyze intelligence information, automate certain surveillance activities, support military planning, and improve cyber operations. The US government is particularly concerned about certain AI investments that could support sensitive military, intelligence, surveillance, or cyber-enabled capabilities. The original rules cover specified AI systems and related activities, not every company that uses artificial intelligence. The legal analysis depends on the technology and activities involved and the definitions contained in the regulations. The COINS Act framework continues to include artificial intelligence systems. For investors, an important consideration is whether a company merely uses commercially available AI tools or develops, produces, or operates specialized AI systems that fall within the relevant definitions. A general software company and a company developing advanced AI capabilities for sensitive applications may face very different regulatory considerations. 3. Quantum Information Technologies Quantum information technology is an emerging field based on principles of quantum physics. It includes quantum computing, quantum communications, and certain quantum sensing technologies. Researchers hope that quantum computers will eventually solve some problems more efficiently than conventional computers. Potential applications include scientific research, materials discovery, optimization, and specialized computational tasks. Quantum technologies may also have national security implications. Advanced quantum computing could eventually affect certain cryptographic systems, while quantum sensing and communications could create new capabilities in defense and intelligence. The original outbound investment rules include certain quantum information technology transactions within the prohibited category. The newer statutory framework continues to identify quantum information technologies as a strategic sector. However, quantum technology remains a specialized field, and a company should not assume that every research project or commercial product falls within the covered definitions. Investors may need to evaluate the company's actual technical capabilities and research objectives before deciding whether a transaction is covered. 4. High Performance Computing and Supercomputing High performance computing refers to the use of powerful computing systems to perform complex calculations and process large amounts of information. Supercomputers are used in weather forecasting, scientific research, engineering, climate modeling, drug discovery, and advanced simulations. They can also support military research, intelligence analysis, and sophisticated technology development. High performance computing is particularly important for training and operating advanced AI systems. A company with access to powerful computing resources may be able to develop complex models or conduct simulations that would be difficult using ordinary commercial computers. The COINS Act identifies high performance computing and supercomputing as areas that can be covered by outbound investment regulations. The Treasury Department's proposed regulations provide technical parameters intended to define the relevant activities. Businesses should pay close attention to the exact definitions rather than assuming that all data centers, cloud computing services, or computer manufacturers are automatically covered. The regulatory question is whether the particular transaction and the technology involved meet the applicable requirements. 5. Hypersonic Systems Hypersonic systems are generally associated with vehicles or other technologies capable of operating at speeds greater than five times the speed of sound. These systems have attracted attention because of their potential military applications. Developing hypersonic technologies can require sophisticated engineering, advanced materials, propulsion research, guidance systems, and extensive testing. The technology can present difficult technical challenges because vehicles operating at very high speeds encounter intense heating and other demanding physical conditions. The COINS Act identifies hypersonic systems as a strategic technology sector. The Treasury Department's proposed rules seek to define the relevant technology and activities. For investors, the important question is whether a company is involved in covered hypersonic technologies rather than merely operating in the broader aerospace or aviation industry. A company manufacturing ordinary commercial aircraft components may have a very different regulatory position from a company developing specialized hypersonic systems. 6. Biotechnology Biotechnology uses biological processes, organisms, or biological systems to develop products and technologies. It has important applications in medicine, agriculture, pharmaceuticals, industrial manufacturing, and scientific research. Biotechnology can support the development of new treatments, improved crops, diagnostic tools, and more efficient manufacturing processes. At the same time, some biotechnology capabilities may raise national security concerns when they involve sensitive biological research or applications that could be misused. The Treasury Department's October 2026 proposed regulations include biotechnology as an additional area under the expanded outbound investment framework. This does not mean that all biotechnology investments are automatically prohibited. The precise scope depends on the proposed definitions, the nature of the technology, the foreign entity involved, and the type of transaction. Because biotechnology is a broad industry, the technical details will be especially important for pharmaceutical companies, research organizations, venture capital investors, and businesses developing advanced biological technologies. The proposed regulations will need to distinguish between ordinary commercial research and activities that meet the relevant national security criteria. How the Investment Restrictions Work The original Outbound Investment Security Program uses two principal regulatory approaches. The first is prohibition. The second is notification. These approaches serve different purposes and create different obligations for investors. Prohibited Investments A prohibited investment is a transaction that a covered US person is not permitted to undertake when the transaction meets the relevant regulatory conditions. The purpose is to prevent certain investments from supporting activities that pose particularly serious national security risks. For example, if an investment falls within a prohibited category under the applicable regulations, an investor cannot make it lawful simply by notifying the Treasury Department. The investor must determine whether the transaction is prohibited before proceeding. Investments Requiring Notification Some transactions may be permitted but still require notification to the Treasury Department. Notification allows the government to obtain information about certain investments involving sensitive technologies and foreign entities. It is important to understand that notification does not necessarily mean the government must approve the transaction before it can proceed. Under the original framework, the program generally does not operate as a case by case approval system. Instead, the investor must determine whether the transaction is prohibited, notifiable, exempt, or outside the rules. The new framework under the COINS Act continues to distinguish between notifiable technologies and prohibited technologies. The precise requirements under the expanded framework will depend on the final implementing regulations. Businesses should therefore establish procedures to identify potentially covered transactions before signing agreements or transferring funds.
Which Types of Transactions May Be Covered
Outbound investment rules can apply to more than straightforward purchases of shares in a foreign company. Depending on the relevant definitions, covered transactions may include certain acquisitions, equity investments, joint ventures, and other arrangements involving sensitive technologies. The original framework addresses several types of transactions, including certain investments in equity, certain convertible debt transactions, and certain arrangements that provide an investor with specific rights or advantages. Some investments can also involve the formation of a new business rather than the purchase of an existing company. For example, an American company might establish a joint venture with a foreign technology company to develop a new semiconductor product. Another investor might provide funding to an overseas AI startup in exchange for an ownership interest. A venture capital firm might invest in a company developing advanced computing technology. Each transaction needs to be evaluated against the applicable legal definitions. The identity of the investor, the nature of the foreign business, the technology involved, and the terms of the investment can all affect the analysis. Not every commercial contract or ordinary purchase of goods is an outbound investment covered by the program. The regulations contain specific definitions and exceptions that determine whether particular transactions are covered. Are All Investments in China Prohibited No. The original Outbound Investment Security Program does not prohibit all American investment activity involving China, Hong Kong, or Macau. Instead, it targets certain transactions involving specified technologies and relevant foreign entities. An American business may continue to have legitimate commercial relationships with companies operating in these markets, provided the activity complies with applicable laws and regulations. However, the fact that a transaction is commercially attractive does not automatically mean it is legally permissible. A company must examine whether the investment involves a covered technology and whether the foreign entity meets the relevant definitions. The original rules also include exceptions for certain transactions, such as specified publicly traded securities, certain limited partner investments, certain intracompany transactions, and certain employee compensation arrangements. These exceptions have specific conditions and should not be interpreted as blanket exemptions for every transaction involving those categories. The COINS Act and its proposed implementing regulations may change the broader framework and require businesses to reassess their compliance procedures. Investors should consult the current Treasury Department regulations and official guidance before making decisions about particular transactions. What the New Rules Could Mean for American Investors The expanded framework could affect investors in several ways. First, investors may need to conduct more detailed due diligence before committing capital to foreign technology businesses. Traditional investment analysis often focuses on a company's financial position, revenue growth, management team, competition, and potential returns. Under outbound investment regulations, investors may also need to examine the company's technical activities, ownership structure, research capabilities, and potential national security applications. Second, investors may face additional compliance costs. They may need to obtain legal advice, collect technical information, review corporate ownership, and establish procedures for identifying covered transactions. Third, some investments may become unavailable if they fall within prohibited categories. Investors may need to reconsider certain transactions or explore opportunities in businesses and jurisdictions that do not create the same regulatory concerns. Fourth, investors may need to monitor regulatory developments more closely. The final rules implementing the COINS Act could establish definitions, reporting obligations, and compliance requirements that differ from the original framework. For institutional investors, these issues may become part of routine investment risk management. For individual investors, the impact may depend on the structure of the investment and whether the individual qualifies as a US person under the applicable rules. The regulatory framework is targeted rather than universal, so the effect on any particular investor will depend on the circumstances. Impact on Venture Capital Firms and Private Equity Investors Venture capital firms often invest in young companies developing new technologies. These investments can provide startups with money, experienced advisers, business contacts, and access to international markets. Private equity firms may acquire significant ownership interests in established businesses and help finance expansion. Under outbound investment regulations, certain investments by these firms can raise compliance questions when the target company operates in a covered technology sector and meets the relevant foreign entity criteria. For example, a venture capital firm might consider investing in an overseas startup developing specialized AI systems. Before proceeding, the firm may need to determine whether the company falls within the covered definitions and whether the proposed investment is prohibited or subject to notification. The firm may also need to examine whether its investment would provide governance rights or other advantages that affect the legal analysis. This can create challenges when investment decisions must be made quickly. Technology startups often compete for funding, and lengthy due diligence can delay transactions. However, a structured compliance process can help investors identify problems earlier and avoid committing capital to transactions that may violate the rules. Venture capital and private equity firms may therefore benefit from integrating national security review into their standard investment procedures. Impact on American Technology Companies American technology companies operate in a global business environment. They may maintain overseas subsidiaries, invest in research partnerships, acquire foreign businesses, or establish joint ventures to develop new products. The outbound investment framework can affect certain activities involving covered foreign entities and sensitive technologies. Companies should understand that compliance responsibilities may extend beyond the department that handles investment decisions. Legal teams may need to work with engineers, cybersecurity specialists, financial officers, and business development teams to identify potentially covered activities. For example, an engineering department may understand the technical characteristics of a product, while the finance department knows the structure of a proposed investment. Both sets of information may be necessary to determine whether a transaction falls within the rules. Businesses may also need to update internal policies, employee training, transaction approval procedures, and recordkeeping systems. A company that identifies potential regulatory issues early may be able to adjust the transaction structure or reconsider the proposed investment before substantial resources are committed. The Role of Due Diligence Due diligence is the process of investigating a business or transaction before making an investment or entering into an agreement. It is already an important part of financial decision making. Under outbound investment regulations, due diligence can also help investors understand their legal obligations. A suitable review may include several areas. The first is corporate ownership. Investors need to understand who owns and controls the foreign company and whether relevant ownership relationships bring the entity within the rules. The second is the company's business activity. A company may operate in several sectors, and some of its activities may be more relevant to national security than others. The third is technical capability. Investors may need to understand what the company actually develops, manufactures, or operates. The fourth is transaction structure. The rights granted to an investor and the form of financing may affect whether the transaction falls within a covered category. The fifth is documentation. Businesses should maintain appropriate records of the information reviewed, the conclusions reached, and the steps taken to comply with applicable requirements. The original Treasury regulations explain that US persons should conduct reasonable and diligent inquiries and may face responsibility for information they could have obtained through an appropriate investigation. The precise standard and obligations must be assessed under the applicable rules. Possible Consequences of Noncompliance Companies and investors should take outbound investment rules seriously. A transaction that is prohibited under the applicable regulations cannot be made permissible simply because the investor did not understand the rules. Failure to comply with notification requirements can also create legal risks. The original framework establishes enforcement provisions and penalties for violations. The COINS Act's proposed implementing regulations also address conduct that may constitute a violation and the applicable penalty and enforcement processes. However, the precise consequences depend on the relevant legal provision, the facts of the transaction, and the regulations in effect at the time. Businesses should not assume that every mistake produces the same penalty. They should also avoid assuming that a transaction is exempt merely because it involves a familiar financial product or a company that has previously received international investment. A compliance review should take place before a potentially covered transaction is completed. Companies facing uncertainty should seek advice from qualified legal professionals who understand US outbound investment regulations. How the Rules Could Affect US and China Technology Competition Technology competition between the United States and China is one of the major issues shaping international economic policy. Both countries have large technology sectors and significant interests in artificial intelligence, semiconductors, advanced computing, and other strategic industries. American investment can provide foreign companies with funding and access to experienced business networks. In some circumstances, investment may also help a company recruit specialized personnel, improve research capabilities, or develop commercial partnerships. The US government is concerned that certain investments could accelerate the development of capabilities that support China's military or intelligence activities. Outbound investment restrictions seek to reduce these risks. However, the long term effects are difficult to predict. Restrictions could reduce access to American capital for some foreign technology companies. They could also encourage companies to seek funding from investors in other countries. At the same time, clearer rules may help American investors understand which transactions are permissible and which create unacceptable risks. The effectiveness of the framework will depend partly on how clearly the regulations define covered technologies and transactions and how consistently they are enforced. The government must also balance national security objectives against the benefits of international investment and scientific cooperation.
Could the Rules Affect the Global Technology Industry
Yes, the effects could extend beyond the United States and China. Technology businesses often rely on international supply chains, cross border research, and investment from multiple countries. A company developing an advanced computing product may have investors in the United States, engineers in Europe, manufacturing partners in Asia, and customers worldwide. Regulations affecting investment decisions can influence how companies structure these relationships. American investors may need to assess whether particular investments fall within the rules before providing capital. Foreign companies seeking American investment may need to supply additional information about their ownership, technology, and business activities. International financial institutions may also need procedures for identifying transactions that could involve covered investments. These developments could encourage more detailed screening and documentation in cross border technology transactions. However, it would be inaccurate to conclude that every international technology partnership will become prohibited. The actual effects will depend on the final regulatory definitions, the technologies covered, the relevant foreign entities, and the exceptions available under the law. Will the New Rules Reduce Investment Opportunities The answer depends on the investment and the technology sector involved. Some investors may find that particular transactions are prohibited or subject to notification. Others may continue investing in foreign businesses without falling within the regulatory framework. The rules may also create new demand for investment opportunities in sectors or markets that do not raise the same national security concerns. For example, investors might focus more heavily on commercial technology businesses whose activities do not fall within the covered definitions. Companies may also invest in domestic research and development or establish partnerships in other jurisdictions. However, moving an investment to another country does not automatically eliminate regulatory obligations. The rules may cover certain foreign entities based on ownership, control, or other legal connections. Investors must therefore examine the substance of a transaction rather than relying only on the location of a company's headquarters. What Businesses Should Do to Prepare Businesses that invest in advanced technologies internationally should establish a practical compliance process. First, they should identify investments and business activities that could involve covered technologies. Second, they should develop a process for collecting information about the foreign entity's ownership, operations, and technical capabilities. Third, they should determine whether the proposed transaction is prohibited, subject to notification, exempt, or outside the scope of the rules. Fourth, they should document their analysis and retain appropriate records. Fifth, they should monitor official announcements from the Treasury Department, especially changes involving the COINS Act. Sixth, they should train employees who participate in investment decisions, mergers and acquisitions, venture capital transactions, and international partnerships. Seventh, they should obtain qualified legal advice when a transaction presents uncertainty. Businesses should also distinguish between the current regulations and the proposed October 2026 rules. The new proposal is intended to implement the COINS Act, but the final requirements have not yet taken effect. The Treasury Department has invited public comments through December 7, 2026. Companies may therefore need to review the final regulations once they are issued and update their compliance programs accordingly. What Individual Investors Should Know Individual investors may wonder whether the new rules will affect ordinary stock market investments. The answer is that the program is not designed to prohibit every investment in a foreign company. The original regulations include exceptions for certain publicly traded securities and other transactions, subject to specific conditions. An individual purchasing an ordinary publicly traded share may be in a different position from a venture capital investor directly funding a foreign startup developing sensitive technology. However, investors should not assume that every transaction involving publicly traded securities is exempt under every possible legal framework. The applicable rules, transaction structure, and relevant definitions matter. The COINS Act and its implementing regulations should be reviewed carefully before reaching conclusions about particular investments. For most individual investors, the key lesson is that national security investment regulations generally focus on specified transactions rather than automatically affecting every ordinary investment in a foreign company. People with substantial cross border investments or involvement in private technology businesses may need more detailed professional advice. The Difference Between Outbound Investment Rules and Export Controls Outbound investment restrictions and export controls are related but distinct areas of regulation. Export controls generally govern the transfer or export of specified goods, software, technology, or technical information. They may restrict the transfer of certain sensitive items to particular destinations, entities, or end users. Outbound investment rules focus on specified investment transactions involving foreign entities and sensitive technologies. The two systems can address related national security concerns, but they do not operate in exactly the same way. A transaction might raise export control questions because of the technology being transferred. An investment in the company developing that technology might separately raise outbound investment questions. Businesses involved in advanced technology may therefore need to evaluate multiple legal frameworks. Compliance with one set of rules does not automatically establish compliance with another. What Happens Next Under the COINS Act The next major stage is the completion of the rulemaking process. The Treasury Department issued its proposed regulations on October 22, 2026. The proposal explains how the department intends to implement the COINS Act and describes the proposed requirements for covered transactions. The government has invited comments on the scope of covered transactions, technical definitions, notification requirements, enforcement, and other aspects of the program. Public comments can help the government identify unclear language, unintended consequences, and practical compliance challenges. After reviewing the comments, the Treasury Department may issue final regulations. Those final regulations will determine the effective date and the operative requirements of the expanded framework. Until then, businesses should continue complying with the existing regulations that took effect on January 2, 2025. Investors should avoid treating the proposed rules as if every provision were already final. They should also avoid assuming that the existing rules will remain unchanged indefinitely. The most reliable approach is to follow official Treasury announcements and review the final regulations when they are published. Frequently Asked Questions What are the new outbound investment rules Outbound investment rules are US regulations that restrict certain investments by American persons and businesses in foreign entities involved in specified sensitive technologies. Depending on the transaction, the rules may prohibit the investment or require notification to the US Department of the Treasury. What is the COINS Act The Comprehensive Outbound Investment National Security Act is a US law enacted on December 18, 2025, as part of the National Defense Authorization Act for Fiscal Year 2026. It establishes a statutory framework for regulating certain outbound investments connected to national security technologies. When did the original outbound investment rules take effect The original Outbound Investment Security Program regulations became effective on January 2, 2025. What technologies are covered The statutory framework identifies semiconductor technologies and microelectronics, artificial intelligence systems, quantum information technologies, high performance computing and supercomputing, and hypersonic systems. The Treasury Department's October 2026 proposed regulations also include biotechnology. The precise scope depends on the applicable regulatory definitions. Are all investments in China prohibited No. The original framework targets specified transactions involving covered technologies and relevant foreign entities. Certain transactions are exempt, and other investments may fall outside the rules. Does every covered investment require government approval No. The original framework distinguishes between prohibited transactions and transactions that require notification. It is not a general case by case approval process for every investment. Can venture capital firms be affected Yes. Certain venture capital and private equity investments may fall within the rules when they involve covered transactions, technologies, and foreign entities. Are the October 2026 rules already final No. The Treasury Department announced proposed regulations on October 22, 2026. The final implementing regulations have not yet been issued as of October 24, 2026. What is the deadline for comments The Treasury Department announced December 7, 2026, as the deadline for submitting public comments on the proposed regulations. Where can businesses find official information Businesses can review the US Department of the Treasury's official Outbound Investment Security Program website for current regulations, guidance, frequently asked questions, and information about the rulemaking process.
