Treasury
Treasury proposes outbound investment rule covering AI systems
Treasury proposed rules that would notify or bar U.S. investment in foreign firms in five technology sectors, AI systems among them. Comments close Dec. 7.
The Treasury Department proposed rules that would require U.S. persons to notify it of some investments in foreign companies working on artificial intelligence systems and bar them from others. Treasury’s release says the COINS Act lists artificial intelligence systems among five technology sectors.
Treasury Proposes Rules Under a New Law
Treasury issued a Notice of Proposed Rulemaking on Oct. 22 to update its Outbound Investment Security Program, according to its press release. The notice follows direction from Congress in the Comprehensive Outbound Investment National Security Act, known as the COINS Act. Congress passed it as part of the fiscal 2026 National Defense Authorization Act. The program page says it became law Dec. 18, 2025.
The program began with an Aug. 9, 2023, executive order covering semiconductors, quantum information technologies and artificial intelligence, Treasury’s program page says. A final rule issued Oct. 28, 2024, took effect Jan. 2, 2025. The 2023 order named China, including Hong Kong and Macau, as a country of concern.
The Act Sets Two Tracks and Five Sectors
The COINS Act directs the Treasury secretary to write regulations on two kinds of transactions involving covered foreign persons, Treasury said Oct. 22. One requires U.S. persons to notify Treasury about companies engaged in “notifiable technologies.” The other prohibits certain transactions with companies engaged in “prohibited technologies.”
The act lets the secretary set technical parameters for both in semiconductor technologies and microelectronics; artificial intelligence systems; quantum information technologies; high-performance computing and supercomputing; and hypersonic systems. The act also lets the secretary add technologies through notice-and-comment rulemaking. Treasury has added biotechnology to the proposed regulations.
The Proposal Covers Duties and Penalties
The notice sets requirements for U.S. persons, including controlled foreign entities, and defines covered transactions and covered foreign persons. It lists excepted transactions and what a notification must contain. It sets a knowledge standard that expects reasonable and diligent inquiry before a transaction. It also names conduct treated as a violation, with penalties.
Treasury Secretary Scott Bessent said in the release that the rules “would strengthen the existing Outbound Investment Security Program to prevent our adversaries from using U.S. investment to develop critical technologies that threaten U.S. national security.” Christopher Pilkerton, assistant secretary for investment security, said they “are designed to address risks that can arise when foreign adversaries try to benefit from U.S. investment in key technology sectors.”
Comments Are Due Dec. 7
Treasury is taking comment on the scope of a covered transaction, key definitions, notification requirements and penalty and enforcement processes, its program page says. Comments are due Dec. 7. Final regulations will follow and will set the program’s effective date, the press release said.
What It Means for the Labs
The rule is a proposal and is not in effect. We think its reach over AI companies will depend on the definition of “artificial intelligence systems” and on the diligence standard U.S. investors would have to meet. Comment on those points closes Dec. 7.