US Treasury Proposes Expanding High-Tech Investment Curbs: Six Sectors Including AI, Five Countries Listed

What happened

The proposed rule implements the Comprehensive Outbound Investment National Security Act (COINS Act), passed in December 2025 as part of the fiscal year 2026 defense authorization act. Outbound investment screening began with a 2023 executive order, under which Treasury built the Outbound Investment Security Program, effective January 2025, initially covering only mainland China, Hong Kong and Macau. The draft extends the countries of concern to Russia, Iran, North Korea and Cuba; biotechnology was added by Treasury Secretary Scott Bessent under statutory discretion, alongside the five sectors named in the statute: semiconductors, AI, quantum, hypersonics and high-performance computing.

The rule applies only to transactions above $50,000: deals totaling no more than $50,000 over the previous 12 months are exempt from the notification duty, but investments in the prohibited class remain barred regardless of amount; most financial investments, including stock purchases, are excluded. Treasury also offers a confidential, non-binding feedback channel and a national-interest exemption. Public comments are due by Dec 7, 2026, and the existing rules keep applying until final regulations set an effective date. Lawyers and former officials quoted by the Associated Press called the draft the first step in a long process, with final rules expected to carry more enforcement weight.

Bessent said the proposal aims to stop American capital from supporting adversaries' sensitive technologies and to give investors clearer guidance. Chinese Foreign Ministry spokesperson Mao Ning responded that overstretching the national security concept, taking discriminatory measures and restricting normal economic and trade activity serves no one's interests, and that China will monitor developments closely and take necessary measures to safeguard its interests. Enforcement already has a precedent: in July, Treasury fined a US-based company $200,000 for failing to report a $92,500 investment by one of its subsidiaries in a Chinese artificial intelligence and robotics company.

Key facts

1. Six sectors: semiconductors and microelectronics, artificial intelligence systems, quantum information technology, high-performance and supercomputing, hypersonic systems, and certain biotechnologies; Treasury uses the term 'superintelligence' for AI.
2. Countries of concern: beyond mainland China, Hong Kong and Macau, the draft adds Russia, Iran, North Korea and Cuba; it covers equity transactions, joint ventures and greenfield projects.
3. Dollar threshold: applies only to transactions above $50,000; deals totaling $50,000 or less over 12 months are exempt from notification, but prohibited investments are barred regardless of amount; most financial investments, including stock purchases, are excluded.
4. Two tracks: transactions are split into prohibited and notifiable classes by technical capability; notifiable deals must be reported to Treasury within 30 days of completion.
5. Procedural milestones: comments due Dec 7, 2026; existing rules apply until final regulations take effect; Treasury offers a confidential, non-binding feedback channel and a national-interest exemption.
6. Enforcement precedent: in July 2026, Treasury fined a US-based company $200,000 for failing to report a $92,500 investment by its subsidiary in a Chinese AI and robotics company.