ENCROSS-BORDER INVESTMENT, TECHNOLOGY & COMPLIANCE · OCTOBER 26, 2026
Treasury Proposes Expanded Outbound-Investment Security Rules
Treasury proposed regulations under the COINS Act that would require notification for certain U.S.-person investments in covered foreign technology businesses and prohibit other covered transactions, while adding biotechnology to the proposed scope.
What Treasury proposed
Source publication date: October 22, 2026. The U.S. Department of the Treasury issued a Notice of Proposed Rulemaking to implement the Comprehensive Outbound Investment Security Act provisions enacted in the fiscal 2026 defense legislation. The proposal would update the existing Outbound Investment Security Program. It is not a final rule; Treasury says final implementing regulations will later establish an effective date after public comments are considered.
- 01Some covered transactions would be prohibited
- 02Other covered transactions would require notice
- 03Biotechnology is proposed for inclusion
The framework distinguishes notifiable and prohibited transactions
The statute directs Treasury to require U.S. persons to notify it of certain transactions involving covered foreign persons engaged in notifiable technologies and to prohibit certain transactions involving covered foreign persons engaged in prohibited technologies. The authorized sectors are semiconductor technologies and microelectronics, artificial intelligence, quantum information technologies, high-performance computing and supercomputing, and hypersonic systems. Treasury also proposes to add biotechnology under its authority to define additional technologies.
Reasonable diligence is part of the proposal
Treasury says the proposal addresses U.S. persons and controlled foreign entities, covered transaction categories, covered foreign persons, excepted transactions, technical specifications, required notification information, nonbinding feedback, confidential submissions, violations, and penalties. It also describes a knowledge standard and expectations for a reasonable and diligent inquiry before a transaction. Coverage can therefore depend on facts beyond the target's name or headquarters, including activities, ownership, control, technology, and the investor's rights.
Practical borrower and investor takeaway
Inventory direct and indirect foreign investments, joint ventures, acquisitions, funds, minority positions, convertible instruments, board or observer rights, services, and other arrangements involving sensitive technology. Document the parties, ownership and control chain, target activities, end users, technology classification, destination, diligence, representations, information rights, closing conditions, and exit options. Coordinate proposed financings with qualified sanctions, export-control, national-security, tax, and transaction counsel; a proposed rule is not final, and this summary does not determine coverage.
Borrowers and investors with cross-border technology exposure should map ownership, control, counterparties, target activities, technology, fund rights, diligence, closing conditions, and reporting obligations before assuming a transaction is outside the proposed program.
Discuss a financing need →This independent summary is based on the cited source and is provided for general educational purposes only. Terms and program requirements may change.