The U.S. Treasury Department has proposed a major expansion of restrictions on American investments in foreign technologies, extending its national security screening regime into biotechnology, advanced computing and additional countries while tightening controls on artificial intelligence and semiconductors.
The 163-page proposed rule, released October 22, would implement the Comprehensive Outbound Investment National Security (COINS) Act enacted in December 2025. It would create a new regulatory framework under 31 CFR Part 851, expanding the existing program that took effect on January 2, 2025.
The proposed restrictions are not yet enforceable as new regulations. Treasury is accepting comments through December 7, 2026, and will establish an effective date in a subsequent final rule. The existing requirements under 31 CFR Part 850 remain applicable in the meantime.
The most consequential distinction for investors is that Treasury is not proposing a blanket ban on investment in foreign technology. Instead, the restrictions depend on the investor, the foreign entity, the specific technology, the transaction structure and whether a regulatory exception applies.
Broader Investment Restrictions
The existing outbound investment program principally targets sensitive transactions connected to China, including Hong Kong and Macau, in three technology areas: semiconductors and microelectronics, quantum information technologies, and artificial intelligence.
The new proposal would broaden that framework in several ways. First, the COINS Act adds high-performance computing, supercomputing and hypersonic systems to the statutory technology coverage. Treasury also proposes to use its authority under the legislation to include specified biotechnology activities. Second, the framework would extend geographic coverage to Cuba, Iran, North Korea and Russia, alongside China. Venezuela requires an important qualification.
Although the statute identifies Venezuela under the government of Nicolás Maduro, Treasury states on page 15 of the proposal that the specified regime no longer exists and that the government recognized by the United States in March 2026 does not meet that statutory description. The proposed text retains the conditional statutory wording rather than establishing unrestricted coverage of every Venezuelan entity.
Third, Treasury would preserve a two-tiered approach: certain transactions would be prohibited, while other covered investments could proceed subject to notification. These changes reflect an effort to regulate not merely the transfer of sensitive technology but also the potential benefits of American capital, management expertise and business relationships.
INVESTOZORA | DATA ANALYSIS
U.S. Direct Investment Abroad Climbed to $7.14 Trillion
Historical-cost investment position at year-end. Annual U.S. Bureau of Economic Analysis figures, 2023–2025.
| Period | Investment Position | Data Status |
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What the data show: The total U.S. direct investment position abroad rose across the reported year-end observations. These figures cover all countries and industries, not exclusively transactions subject to Treasury’s outbound investment restrictions.
© Investozora: Calculation using BEA data shows U.S. direct investment abroad rose approximately $542 billion (8.2%) from 2023 to 2025.
INVESTOZORA
Biotechnology Enters Scope
Biotechnology is among the proposal’s most consequential additions because it reaches technologies associated with medicine, industrial production and scientific research.
On pages 39–40 of the proposed regulatory text, Treasury identifies sensitive biotechnology activities involving biological agents and toxins, energetic materials, advanced functional materials, pharmaceutical compounds, biofuels and related production technologies.
The proposed language expressly discusses pharmaceuticals such as vaccines, cell and gene therapies, monoclonal antibodies and other therapeutic products. It also addresses brain-computer interfaces and specified biomanufacturing equipment. That breadth could create significant transaction-classification questions for venture capital funds, pharmaceutical companies and biotechnology investors with operations or counterparties in covered countries.
However, a reference to pharmaceutical compounds does not establish that every ordinary drug-development agreement would be prohibited. Coverage must be evaluated against the precise regulated activity and transaction definition. For example, purchasing an equity interest in a covered biotechnology company presents a different legal question from entering a conventional commercial licensing agreement without an equity investment.
Treasury’s proposal identifies exceptions for certain secondary transactions and financial services, but its exact treatment of complex licensing arrangements will require careful review as the regulations are finalized.
The practical issue is therefore narrower and more demanding than simply asking whether a foreign company operates in biotechnology: investors must establish whether the entity undertakes a specified prohibited activity and whether the contemplated transaction falls within the regulatory definitions.
AI Controls Tighten
Artificial intelligence is not newly entering the investment security framework. It was already covered under the rules adopted in 2024. The October proposal would expand the treatment of sensitive systems while adopting the federal terminology of super intelligence, abbreviated SI.
The proposal explains that this terminology follows Executive Order 14434, issued September 29, 2026. The change should not be confused with a scientific determination that every covered system possesses human-level or superior intelligence. The definition is concerned with machine-based systems and their capabilities, including systems integrated into software, hardware, applications, autonomous equipment and agentic systems.
For investors, this means the relevant question is not merely whether a company markets itself as an AI developer. Its actual technological activities and the proposal’s technical criteria determine whether a transaction falls within the prohibited or notifiable category.
The distinction matters particularly to investors evaluating AI market exposure and technology valuations. The regulatory proposal creates potential constraints on particular cross-border investments; it does not itself establish a change in public-company earnings or market prices.
The $50,000 Exception
One of the most important details appears deep in the proposal’s discussion of exceptions. Treasury proposes a $50,000 de minimis threshold, calculated by aggregating relevant transaction values and funding provided to the foreign entity or joint venture across the preceding 12 months.
Crucially, this exception would apply only to transactions that would otherwise require notification. It would not exempt prohibited transactions. Treasury expressly explains this limitation on page 59 of the proposal.
Consequently, a proposed investment of $30,000 in a prohibited technology would not become permissible simply because it falls below $50,000. A qualifying investment in a notifiable technology could receive different treatment, subject to the proposed aggregation and valuation conditions.
Non-cash consideration would count toward the threshold at fair market value, and Treasury would not necessarily accept an investor’s valuation. This is a significant compliance distinction for investors considering repeated financing rounds, convertible instruments or other transactions that cannot be assessed solely by their initial cash payment.
The proposal also provides exceptions for certain publicly traded securities, qualifying investment funds and specified financial activities. Ordinary investment in publicly traded shares therefore generally occupies a different regulatory position from a direct private-equity acquisition or a joint venture, although the applicable conditions still matter.
The distinction between direct financial exposure and the functioning of financial markets is also important. Treasury’s separate bank reserve movements and the Federal Reserve’s balance sheet mechanics concern domestic monetary liquidity, not the legal eligibility of outbound technology investments. The two subjects should not be treated as interchangeable regulatory risks.
Compliance and Costs
The proposal would require covered investors to evaluate whether a transaction is prohibited, notifiable or outside the framework. Its definition of covered transactions encompasses certain equity acquisitions, debt financing, limited-partner investments, greenfield projects and joint ventures.
U.S. persons could also have responsibilities involving foreign entities they control. The proposal preserves a reasonable-and-diligent-inquiry standard and adds consideration of relevant information previously supplied by Treasury when assessing an investor’s knowledge.
Notification rules would also be expanded to request information that Treasury says it has frequently obtained through subsequent inquiries under the existing program. For affected businesses, the operational consequences could include additional technology diligence, ownership assessments, contractual review, recordkeeping and regulatory reporting.
But Treasury’s economic analysis deserves careful interpretation. On pages 73–74, the agency identifies commercial data covering approximately 300 investments involving nearly 230 U.S.-based investors during roughly 2023–2025. Those records suggest approximately 100 potentially relevant transactions annually.
Treasury then doubles that annual transaction estimate to 200 to account for transactions potentially missing from commercial datasets. That adjustment is an assumption for regulatory cost modeling, not evidence that 200 prohibited investments occur every year. The distinction becomes more important when assessing the agency’s estimates of compliance costs.
For notification expenses, Treasury assumes all 200 potentially relevant annual transactions would require notifications. It estimates 50 person-hours per notification and hourly labor costs of $231–$293, producing an estimated annual notification cost range of $2.31 million–$2.93 million.
Investozora’s analysis of the methodology: The estimate is best understood as a modeled administrative burden under deliberately broad assumptions, not a forecast of actual notification filings. Treasury itself acknowledges that some evaluated transactions would ultimately be excluded and others prohibited, with neither category producing a conventional notification under the proposed framework.
The agency’s separate diligence-cost calculation uses a high-end assumption of 40 additional person-hours per transaction. Those assumptions do not measure the value of investments that might be abandoned, redirected or restructured because of the restrictions. This limits what the cost estimates can tell readers about the overall economic impact.
What Happens Next
Treasury has invited comments through December 7, 2026, including feedback on technology definitions, transaction coverage, exceptions, notification obligations and enforcement. The official Treasury announcement says the agency will review submissions before issuing final implementing regulations.
Until those regulations become effective, companies and investors must continue complying with the existing framework. The proposal does not retroactively impose its broader restrictions on earlier transactions, although existing obligations and potential enforcement liabilities remain relevant.
The timing matters for private investors and corporate dealmakers reviewing transactions in sensitive sectors. Planned financing rounds, investment commitments and joint ventures may require assessments of both the currently applicable rules and the possible future framework.
The new regulations could also influence the direction of technology capital flows without directly controlling broader indicators such as Treasury yields or the federal funds rate. The central unresolved questions are how Treasury will narrow or preserve the proposed biotechnology definitions, how complex commercial relationships will be treated, and what final exceptions and compliance procedures will apply.
For now, the verified change is regulatory direction rather than an immediate new prohibition: Congress has expanded the statutory framework, and Treasury has proposed the implementing rules. The precise obligations of investors under that expanded framework remain subject to final rulemaking.
