U.S. Treasury proposes updating outbound investment restrictions, adds biotechnology to scope
Key Facts
On October 22, 2026, the U.S. Treasury Department issued a notice proposing rules to update the outbound investment security program under the COINS Act, expanding oversight of U.S. investment in strategic technologies. The law requires Treasury to be notified of certain transactions involving covered foreign persons and prohibits other transactions in specified technologies. Treasury Secretary Scott Bessent said the proposed rules aim to prevent adversaries from using U.S. investment to develop technologies that threaten U.S. national security. The proposal remains under review, as final regulations have not yet been issued. That means the announcement opens a rulemaking process and does not set a new date for the rules to take effect.
The law covers five technology sectors: semiconductors and microelectronics, artificial intelligence systems, quantum information technologies, high-performance and supercomputing, and hypersonic systems. Treasury added biotechnology to the proposed rules, citing the law’s authority to include other technologies linked to military, intelligence, surveillance or cyber capabilities. The update therefore extends beyond the fields covered by earlier restrictions on chips and artificial intelligence. The Treasury announcement does not specifically concern cancer treatments or cooperation between major pharmaceutical companies and Chinese biotechnology firms. Expanding the sectors places biotechnology within the proposed review framework, without itself announcing a ban on every investment or partnership in the field.
The notice details covered foreign entities, excepted transactions, technical specifications, notification requirements and a process for requesting nonbinding guidance. It also addresses the knowledge standard and applicable penalties, two elements that determine how parties comply with the proposed rules and the risks of violating them. According to The Associated Press, the proposal applies to investments exceeding $50,000, with many financial investments, including stock purchases, exempted. This means that identifying the type of transaction, sector and target party will be essential to determine whether a deal requires notification or falls within the prohibited transactions. Jason Chipman, a former Justice Department lawyer specializing in cybersecurity, investment rules and export controls, said the new rule “will require more comprehensive compliance programs to manage risk.”
The program in its previous form began after a 2023 executive order and imposed restrictions on U.S. outbound investment in sectors including semiconductors, quantum computing and artificial intelligence. Congress then passed the COINS Act in December 2025, codifying the program and expanding its scope to additional technologies and countries, including Cuba, Iran, North Korea and Russia. Treasury says investment could help adversaries develop capabilities that affect national security, while an official at a research institute said the review of outbound investment “recognizes that capital can accelerate capabilities tied to military needs just as technology transfers can.” The program update comes as the United States and China trade restrictions on exports of sensitive technologies and products and impose tariffs. The two sides extended a temporary trade truce through January, according to The Associated Press.
On investment in China, foreign flows fell 4.3% year over year to 548.8 billion yuan in the first nine months of 2026, according to Reuters via MarketScreener. But the pace of decline narrowed from 5.3% in the first eight months, while foreign investment in high-tech industries rose 33.8% from January to September, led by research and development and design services. China’s vice commerce minister said geopolitical tensions, weak growth momentum and increased protectionist and unilateral measures were weighing on the attraction of foreign capital. The figures show two diverging trends in China: overall flows declined even as investment in high-tech industries grew. Across the economy, China’s gross domestic product grew 4.5% year over year in the third quarter, compared with 4.3% in the second quarter, and growth reached 4.6% in the first three quarters.
The Associated Press attributed third-quarter growth to strong exports, while domestic demand remained weak and was affected by a property market downturn that has persisted for years. Chinese leaders set an economic growth target of between 4.5% and 5% for 2026. In the United States, Treasury will review public comments before issuing final implementing regulations, which will set the program’s effective date. Until those regulations are issued, current rules remain in force; Treasury confirmed that the program rules that took effect on January 2, 2025, will remain in place until regulations under the COINS Act are issued. Ryan Majerus, a former U.S. trade official, described the proposal as “the first step in a long journey” that could lead to changes with a stronger focus on enforcement.