Treasury Proposes Expanded Outbound Investment Security Program Rules

The US Department of the Treasury ("Treasury") published a Notice of Proposed Rulemaking (Proposed Rule) on October 26, 2026, to implement the requirements of the Comprehensive Outbound Investment National Security (COINS) Act, enacted in December 2025. Pursuant to the COINS Act, the Proposed Rule updates the Outbound Investment Security Program ("OISP"), which has been in effect since January 2025. While the Proposed Rule does not change the general structure or focus of the current OISP rules ("Current OIR"), it would expand the scope and obligations of the program in significant ways.

Many provisions of the Proposed Rule are substantively the same as those in the Current OIR. Accordingly, Treasury has decided to leave the Current OIR in place until the promulgation of the final rule. Treasury will set an effective date for the final rule following the comment period. Treasury is soliciting comments on the Proposed Rule until December 7, 2026, and the final rule is expected to be issued by mid-March 2027 in accordance with the requirements of the COINS Act.

The majority of changes to the OISP under the Proposed Rule would stem from the use of new and revised definitions. The main changes are discussed below, and also summarized by Treasury in a Fact Sheet.

Country of Concern

The Current OIR names only China (including Hong Kong and Macau) as a "country of concern." As required by the COINS Act, the Proposed Rule adds Cuba, Iran, North Korea, Russia and Venezuela (under the government of Nicolás Maduro) to the scope of the OISP. However, given the range of sanctions currently imposed on these countries, this change is not expected to have a material short-term impact. Also, as acknowledged in the Proposed Rule, the current government of Venezuela, led by Delcy Rodriguez and recognized by the United States, does not meet the criteria for inclusion in the definition.

Prohibited and Notifiable Technologies

The universe of covered sectors under the Proposed Rule, now separated into the defined terms "notifiable technology" and "prohibited technology," would be expanded to include high-performance computing and supercomputing, hypersonic systems and biotechnology. Notably, the biotechnology sector was not explicitly named in the COINS Act, and is thus an expansion of the OISP's jurisdiction at Treasury's discretion. Separately, the Proposed Rule replaces the term "AI system" with "super intelligence (SI) system" pursuant to a recent executive order. As updated by the Proposed Rule, the covered sectors would be:

Super Intelligence (SI) Systems (formerly AI Systems): Under the Proposed Rule, an investment in an entity within the scope of the OISP that is developing any SI system would be a prohibited transaction. Treasury notes that since the publication of the Current OIR, the technology in this sector has undergone rapid transformation, and the range of SI systems developed pose unique and ever-expanding national security risks to the United States. Importantly, the Proposed Rule would incorporate directly into the definition of prohibited technology notes from the Current OIR that clarify the specific uses of SI systems that are excluded from the defined term.

Semiconductor Technology and Microelectronics: The Proposed Rule maintains existing prohibitions and adds new prohibited technologies: radiation-hardened ICs, photonic ICs, high-bandwidth memory and other advanced ICs. The Proposed Rule maintains the existing notification requirement for any semiconductor and microelectronics activity not otherwise prohibited by the OISP.

Quantum Computing: Under the Proposed Rule, Treasury intends to keep the blanket prohibition on transactions in quantum information technologies, while expanding the prohibition to include the development of algorithms and applications for quantum information science technologies and certain quantum networks and quantum communication systems.

High-Performance Computing and Supercomputing: The prohibitions on investment in supercomputing under the Current OIR remain the same under the Proposed Rule, and are extended to include components used therein. Additionally, the Proposed Rule adds as a notifiable technology the development or production of high-bandwidth, low-latency interconnects for high-performance computing.

Hypersonic Systems: Hypersonic systems are not included under the Current OIR. The Proposed Rule defines hypersonic systems to include a vehicle or weapon delivery system capable of sustained atmospheric or very low Earth orbit flight at speeds of Mach 5 or greater. Notifiable technology includes sensors, guidance/navigation software and certain materials, while prohibited technology includes the hypersonic systems themselves, propulsion systems, propellants, specialized test materials/coatings and digital twin/thread technology.

Biotechnology: Biotechnology is not included under the Current OIR. The Proposed Rule would add, as prohibited technology, development/engineering/use of biological systems to modify or produce export-controlled agents/toxins, energetic materials, novel functional materials, pharmaceutical compounds and biofuels, as well as brain-computer interfaces, biomanufacturing equipment, sequencing technology, certain lab instruments and automated scientific-discovery tools. Treasury has not included any biotechnology items as notifiable technology, and Treasury invites comment on the inclusion of certain biotechnology items in the definition of prohibited technology given the countervailing public interest in this sector.

Covered National Security Transactions

Under the Proposed Rule, the defined term "covered transaction" from the Current OIR would be replaced by the term "covered national security transaction." The terms are largely the same. However, the Proposed Rule adds an additional transaction type by incorporating into the definition of covered national security transaction the concept of a US person's "knowingly directing" a transaction by a foreign person that the US person knows at the time of transaction would constitute a covered national security transaction if engaged in by a US person. The Proposed Rule would expand the application of the "knowingly directing" concept to cover both prohibited and notifiable transactions, while only the former is covered under the Current OIR.

Prohibited and Notifiable Transactions

Under the Current OIR, investments that would otherwise be notifiable are instead considered prohibited transactions if the covered foreign person is designated on one of several sanctions or export control lists. The Proposed Rule would expand this set of lists to include the Department of War's Section 1260H list of Chinese military companies and the Office of Management and Budget's list of biotechnology companies of concern in accordance with the BIOSECURE Act. Importantly, the Proposed Rule includes affiliates and subsidiaries of such foreign persons, greatly expanding the scope of this provision.

Under the Current OIR, the imputation of knowledge from a US person's controlled foreign entity to such US person with respect to notifiable transactions is ambiguous. The Proposed Rule clarifies that US persons are obligated to file a notification with Treasury with respect to any transaction undertaken by its controlled foreign entity that the controlled foreign entity or US person knew at the time of the transaction would be a notifiable transaction if engaged in by a US person.

Covered Foreign Person

The Proposed Rule collapses the Current OIR's related definitions of "person of a country of concern" and "covered foreign person" into a single definition of "covered foreign person." The new definition of covered foreign person focuses on a person's relationship to a given country of concern and is detached from such person's activities in prohibited and notifiable technologies. As in the Current OIR, the Proposed Rule includes the following persons as covered foreign persons:

1. Natural persons who are citizens or permanent residents of a country of concern and who are not US citizens or permanent residents;
   
   
2. Entities incorporated in, having a principal place of business in or otherwise organized under the laws of a country of concern;
   
   
3. The government of a country of concern, including any political subdivision, political party, agency or instrumentality thereof, or any person acting for or on behalf of the government of a country of concern;
   
   
4. Entities owned in the aggregate, directly or indirectly, 50% or more, in terms of outstanding voting interest, voting power of the board or equity interest, by any person meeting the criteria in #1-3 above, as well as entities in which one or more covered foreign persons under this criterion holds 50% or more of such voting interests; and
   
   
5. Entities in which a covered foreign person holds an interest that meets the revenue, net income, capital expenditure or operating expenses thresholds set forth in the Current OIR definition of covered foreign person.

In addition, new categories of covered foreign persons added in the Proposed Rule are:

1. Members of the Central Committee of the Chinese Communist Party or the political leadership of a country of concern, as well as entities owned in the aggregate, directly or indirectly, 50% or more in terms of outstanding voting interest, voting power of the board or equity interest by such persons; and
   
   
2. Entities directly or indirectly subject to the direction or control of any person otherwise meeting the criteria to be a covered foreign person, as well as entities in which one or more covered foreign persons under this criterion holds 50% or more of such voting interests.

The Proposed Rule also includes a new definition for "subject to the direction or control," and keeps the notes on financial calculations from the Current OIR.

Excepted Transactions

The list of excepted transactions remains largely the same under the Proposed Rule. However, four new exceptions are added:

De Minimis Transactions: The Proposed Rule would set a de minimis threshold at $50,000 aggregated across the preceding 12 months. Notably, this exception is only available against notifiable transactions, and Treasury is not bound by the US person's own valuation.

Secondary Transactions: The Proposed Rule would except transactions "secondary" to a prohibited or notifiable transaction. Nine types of secondaries are excepted: (i) contractual arrangements or procurement of material inputs (excluding technology-transfer arrangements); (ii) bank lending; (iii) payment processing/clearing; (iv) underwriting services (including temporary equity acquisitions solely to facilitate underwriting); (v) debt rating services; (vi) prime brokerage; (vii) global custody; (viii) equity research/analysis and (ix) similar services.

Ancillary Transactions: The Proposed Rule would specifically except ancillary transactions undertaken by financial institutions (as defined in 31 U.S.C. 5312), covering payment processing for a covered foreign person, underwriting services, credit rating services and other incidental financial services (deposit accounts, custody, foreign exchange, remittances, safe deposit).

Ordinary and Administrative Transactions: The Proposed Rule would except any "ordinary or administrative business transaction," but Treasury opted not to include a definition for such term. Treasury believes that transactions that would fall into this category would already be covered as ancillary transactions, and welcomes comment on transactions that could be captured by this exception.

COINS Act Compliance Tools

As previewed in the COINS Act, the Proposed Rule would create a new "non-binding feedback" process for a party to request confidential feedback or anonymized public guidance on whether a transaction would be prohibited. The Proposed Rule would also create a new mechanism for the public to submit confidential evidence about whether a foreign person is a covered foreign person. Treasury would require that parties submitting requests for feedback have a direct financial interest in the transaction, provide sufficient transactional details and certify that the request contains true, correct and complete disclosure of all material facts and circumstances known to the party submitting the request. Treasury notes that it expects that parties will have conducted sufficient due diligence prior to submitting a request for feedback. The creation of a pretransaction feedback mechanism is in line with Treasury's establishment of a CFIUS prefiling consultation function in July 2026.

The Proposed Rule also contemplates the public database of covered foreign persons authorized under the COINS Act. Treasury notes that it is considering such a database, but that it would supplement and not replace the requirement of reasonable and diligent inquiry in all transactions.

While the structure of the OISP would remain largely the same, the Proposed Rule's implementation of the COINS Act would significantly expand the scope of the program while providing clarity on certain points of ambiguity under the Current OIR. For example, Treasury confirmed in commentary that secondary acquisitions of limited partnership interests in private funds are subject to the OISP, but acknowledged that this is a situation in which the ability to conduct due diligence "may be somewhat limited."

US investors should review these proposed changes and submit comments to Treasury as advisable on the new provisions. In particular, US investors should update their due diligence processes to reflect the expansion of notifiable and prohibited technologies and covered foreign persons, as well as reexamine the availability of potential exceptions.