On October 22, 2026, the US Department of the Treasury (Treasury) issued a Notice of Proposed Rulemaking (NPRM) to implement the Comprehensive Outbound Investment National Security Act (COINS Act), enacted as part of the FY 2026 National Defense Authorization Act. The COINS Act codified the Outbound Investment Security Program (OISP) that was first proposed in August 2023, pursuant to an executive order during the Biden Administration, and implemented in final form on January 2, 2025.

The NPRM text is available here. Treasury’s Press Release and Fact Sheet provide additional detail. Comments on the proposed regulations set forth in the NPRM are due December 7, 2026.

Background

As originally implemented, the OISP restricts certain “covered transactions” by US persons and by non-US entities they control in “covered foreign persons.” These are generally entities in or connected to China (including Hong Kong and Macau) that are engaged in specified activities in the AI, semiconductor and microelectronics, and quantum computing sectors.

Some covered transactions are subject to notification requirements, whereas others are prohibited. As originally drafted, nearly all covered transactions involving quantum computing are prohibited. With respect to AI and semiconductors and microelectronics, certain transactions are prohibited, but others are only notifiable. The NPRM proposes to expand the OISP so that more sectors are covered and more transactions are subject to investment prohibitions.

NPRM: Key Takeaways

Expanded prohibition of investments in AI or “super intelligence systems.” The proposal would prohibit investments in covered foreign persons that develop any “super intelligence system,” or “SI system.” This would be significantly more restrictive with respect to AI than the current regime, which prohibits investments involving certain “AI systems” that meet specified end-use or training-compute criteria and requires notification, rather than prohibition, for certain other AI-related investments.

New prohibition of investments in biotechnology. The NPRM expands the sectors previously covered in the OISP—and those expressly identified in the COINS Act statute—to add “biotechnology” as a new covered sector. Specifically, the NPRM would prohibit investments in covered foreign persons engaged in any of the following activities:

• Development, engineering or use of a biological system—or any component of a biological system—to modify, enhance, produce or control any of the following compounds or materials:

1. An agent or toxin restricted in 7 CFR part 331, 9 CFR part 121, 42 CFR part 73, 22 CFR part 121 or 15 CFR part 774, or novel agents or toxins that are capable of causing death, disease or other biological malfunction in a living organism; deterioration of food, water, equipment, supplies or material; or deleterious alteration of the environment;
2. An energetic precursor or energetic material, including propellants, explosives and pyrotechnics;
3. A novel or high-performance functional material, i.e., a bio-derived product that exhibits novel or enhanced properties, such as an adaptive or protective coating, bio-cement or other material for agile infrastructure, material capable of self-repair or self-assembly, or a biosensor;
4. A pharmaceutical compound, including small molecules, polymers, vaccines, blood and blood components, allergenics, cell and gene therapies, and monoclonal antibodies or other recombinant therapeutic proteins, as well as their delivery mechanisms; or
5. A biofuel, i.e., fuel made or derived from a bio-based feedstock; 

• Development or production of brain computer interfaces, including invasive, partially invasive, noninvasive and hybrid systems that enable interaction between the brain and its environment, as well as associated software;
• Development, construction or production of biomanufacturing equipment, including components and associated software or technology and as identified in Export Control Classification Number 2B352, 2D352 or 2E001, in supplement no. 1 to 15 CFR part 774;

• Development or production of the following technology or equipment, including components and associated software:

1. Biological sequencing technology, including short-read or long-read sequencing;
2. Flow cytometers and cell sorters that are designed for spectral analysis or that contain 26 or more detectors or channels;
3. Liquid chromatography mass spectrometry instruments designed for top-down proteomic analysis;
4. Computational or bioinformatics tools for research, design, optimization, modeling and simulation, discovery, or assessment of biological systems or processes; and
5. Hardware, robotics or software for automated scientific discovery or experimentation, including laboratory automation or cloud lab infrastructure.

New “1260H” prohibition. The NPRM would prohibit investments involving otherwise notifiable technologies (i.e., semiconductors, hypersonic systems, certain high-performance computing inputs) where the relevant covered foreign person is designated on the Pentagon’s Section 1260H List of Chinese Military Companies or identified on the forthcoming list of Biotechnology Companies of Concern. The prohibition would also extend to certain affiliates and subsidiaries of listed entities. This represents a substantial broadening of the restrictions associated with a Chinese entity’s designation on the 1260H List.

New exceptions for underwriting IPOs and de minimis investments. The NPRM proposes to introduce exceptions for de minimis investments (investments of less than $50,000) and certain “underwriting services including, but not limited to, the temporary acquisition of an equity interest for the sole purpose of facilitating underwriting services.” The latter change will make it easier for US underwriters to facilitate initial public offerings (IPOs) involving Chinese entities subject to the rules. Treasury does not appear to have proposed a detailed definition of “temporary acquisition.” The NPRM retains the OISP’s exception for publicly traded securities.

Conclusion

This NPRM represents the most significant proposed expansion of the US outbound investment regime since Treasury’s initial OISP regulations and, if adopted largely as proposed, would materially increase compliance obligations and transaction restrictions for US investors operating in sensitive technology sectors in China and other covered jurisdictions.

Given the breadth of the proposed expansion, companies, investors, financial institutions, venture capital funds, and other market participants with exposure to China and other covered jurisdictions should closely review the proposal, determine potential risks to current and future transactions, and consider submitting comments before Treasury finalizes the rule.