Washington has long policed what American companies sell to China and what Chinese buyers acquire in the United States. A proposed Treasury rule released on Thursday, October 22, tightens a third line: where American money goes. The draft would bar US persons from investing in companies in China and other countries of concern that develop what the rule calls “super intelligence systems,” and require notice to Treasury for certain deals in five other technology sectors.
Three different tools
Outbound screening is easy to confuse with two older programs.
Export controls govern goods, software and technology leaving the United States. They are run by the Commerce Department’s Bureau of Industry and Security, which maintains the Commerce Control List and the Entity List. The proposed rule borrows from that system in places, for example by referring to chips classified under Export Control Classification Number 3A090 and by pointing to companies on its Entity List.
CFIUS, the Committee on Foreign Investment in the United States, looks the other way. Treasury chairs the interagency committee, which reviews certain foreign investments into US businesses and certain foreign purchases of US real estate for national security risk.
Outbound screening covers US capital flowing abroad. Treasury’s Outbound Investment Security Program has applied since January 2, 2025, under what the agency calls the Part 850 Regulations. The new proposal would implement the Comprehensive Outbound Investment National Security (COINS) Act, which Congress passed as part of the fiscal 2026 National Defense Authorization Act, and would create a new Part 851.
Prohibited versus notifiable
The rule sorts deals into two buckets. A transaction involving a foreign company that engages in a “prohibited technology” would be a prohibited transaction, meaning “it could not legally be undertaken,” the proposal says. A transaction involving a company that engages in a “notifiable technology” would be allowed, but the US investor would have to file specified information with Treasury.
The sectors are semiconductors and microelectronics, quantum information technologies, high-performance computing and supercomputing, hypersonic systems, and biotechnology, which Treasury added using authority in the law to go beyond the sectors Congress listed. Several of those sectors carry both prohibited and notifiable tiers. Super intelligence systems would sit entirely in the prohibited category: the proposed text lists “development of any SI system” as a prohibited technology.
The burden of sorting falls on the investor. A US person would have to determine whether a transaction is prohibited, notifiable or outside the rule, and Treasury would judge whether the investor made a “reasonable and diligent inquiry.” Investors could seek a national interest exemption from the ban, Treasury said, according to Reuters.
Who is a US person, and what counts as a deal
The proposed definition of a US person covers any US citizen or lawful permanent resident, any entity organized under US law including its foreign branches, and any person in the United States. US persons would also have to take “all reasonable steps” to stop a foreign entity they control from doing a deal that would be banned if they did it themselves.
Covered transactions go well beyond buying shares. The proposal lists acquisitions of equity or contingent equity, certain loans that carry equity-like rights such as board seats, joint ventures with a covered foreign person, greenfield projects that would set up a covered business in a country of concern, and some limited partner stakes in venture capital, private equity and other pooled funds. It also reaches a US person who directs a foreign company to make a deal that would be covered if a US person made it.
Some deals are excepted. They include investments in publicly traded securities and certain limited partner stakes where committed capital is $2 million or less or the investor has a binding assurance its money will not go into covered deals. Treasury also set a de minimis value of $50,000, aggregated across transactions with the same company over the preceding 12 months. The proposal says that exception applies to the notification requirement only, so it does not open a gap in the ban.
Countries of concern are China, including Hong Kong and Macau, plus Cuba, Iran, North Korea and Russia. Treasury dropped Venezuela, though the rule could still apply to certain Venezuelan entities, Reuters reported.
Why Treasury dropped compute thresholds
The current rules split “AI systems” into banned, notifiable and uncovered groups based largely on how much computing power went into training, along with designed and intended end uses. The proposal abandons that approach.
Over the past two years, models “have achieved notable performance gains through additional means other than the quantity of training compute,” Treasury wrote, citing synthetic data generation, more efficient algorithms and architectures, new post-training techniques and greater inference-time compute. “Therefore, no single measure, benchmark, or threshold is currently sufficient to distinguish advanced models.”
Treasury also said general purpose models may have national security uses their developers never advertised, and that capable open-source models with fewer safeguards complicate the picture. Banning development of any super intelligence system, it argued, spares investors from having to assess “the technical capabilities or thresholds” of a foreign company’s models, which the current rules required.
“It’s not just about the investment itself; it’s not just about the money. It’s about the network, the supply chain, and things like that that come from that investment,” Assistant Secretary Chris Pilkerton, who oversees investment security, told Reuters.
From proposal to final rule
The document is a notice of proposed rulemaking, not law yet. Written comments are due December 7, 2026, according to the proposal. Treasury said it will consider that input before issuing final regulations, which will set the program’s effective date. The new rules will not apply retroactively, and the existing Part 850 rules continue to cover deals made before the final rules take effect. Treasury proposes civil penalties for violations and would drop the criminal penalty language in the current rules, since the COINS Act does not include it.
Story so far
Sources
- US Treasury: Treasury Issues Proposed Rule to Implement Comprehensive Outbound Investment National Security Act (October 22, 2026)
- US Treasury: COINS Act notice of proposed rulemaking (comments due December 7, 2026)
- US Treasury: The Committee on Foreign Investment in the United States (CFIUS)
- Reuters via Investing.com (Andrea Shalal): US Treasury drops Venezuela from countries facing outbound US investment restrictions (October 22, 2026)