Treasury Releases Proposed Rule to Implement COINS Act and Broaden Outbound Investment Restrictions by including Biotechnology and Prohibiting Investments in Super Intelligence

On October 22, 2026, the U.S. Department of the Treasury (“Treasury”) released a Notice of Proposed Rulemaking (“NPRM”) to implement regulations related to the Outbound Investment Security Program (“OISP”). The NPRM proposes a number of important updates to the OISP, including by adding three new sensitive technology sectors to the program (most notably biotechnology), updating and expanding restrictions on existing sectors—especially by prohibiting investment in most forms of artificial intelligence (“AI”), formally referred to in the NPRM as super intelligence (“SI”)—and adding several new “countries of concern.”

These updates are required by the Comprehensive Outbound Investment National Security Act of 2025 (“COINS Act”), which was enacted in December 2025 (the details of which we addressed in a previous Legal Update). The existing OISP regulations have been in effect for almost two years and require the notification of or prohibit certain outbound investments and other transactions by US persons involving persons of countries of concern, and certain related entities, engaged in activities involving three sensitive sectors: (1) semiconductors and microelectronics; (2) quantum information technologies; and (3) certain AI systems (see our Legal Update on the details of the OISP).

Comments on the NPRM are due by December 7, 2026. Pursuant to the COINS Act, Treasury must issue final implementing regulations by mid-March 2027.

Key Aspects of the NPRM

Much of the NPRM mirrors the existing OISP regulations. However, there are several important differences in the NPRM as compared to current regulations.

First, the NPRM proposes to add three new technology sectors: 1) high-performance computing and supercomputing; 2) hypersonic systems; and 3) biotechnology (the first two were mandated by statute; biotechnology was proposed at the Secretary’s discretion). The NPRM proposes to require notification or prohibit certain transactions involving high-performance computing and hypersonic systems, and to prohibit certain transactions in biotechnology altogether.  The industry sectors specifically addressed in the NPRM are:

• Biotechnology:
• New prohibition on US person investment into: (a) using biological systems to modify or produce controlled agents and toxins, energetic materials, novel functional materials, pharmaceutical compounds, and biofuels; and (b) brain-computer interfaces, biomanufacturing equipment, sequencing technology, certain cytometry and mass spectrometry instruments, computational and bioinformatics tools, and automated scientific discovery or lab automation tools.

• Hypersonics:
• New prohibition on US person investment into in Mach 5+ systems (military and civilian), propulsion, fuels and propellants, specialized materials, test facilities, and digital twin and digital thread tools.
• New notification requirement for US person investment into sensors, guidance and controls, research and testing software, and other materials capable of use in a hypersonic system.

• High-performance computing:
• New prohibition on US person investment on components designed to enable supercomputer capabilities.
• Continued prohibition on US person investment in supercomputers;
• New notification requirement for high-bandwidth, low-latency interconnects.

• Super Intelligence:
• New prohibition on US person investment in developing any SI system, replacing the current, narrower ban based on training compute- and end-uses.
• Discontinued notification requirement for SI systems, with those transactions now falling within the ban.

• Quantum:
• New prohibition on US person investment in (a) quantum design, simulation, testing, and control software, and (b) algorithms and applications for quantum information science technologies.
• Continued prohibition on US person investment in quantum computers and critical components (expanded to components needed to operate, and not just produce, a quantum computer), as well as certain sensing platforms and quantum networks and communications.

• Semiconductors:
• New prohibition on US person investment in the development or production of high-bandwidth memory above 2 GB/s per mm², radiation-hardened chips, photonic chips, and chips made from silicon carbide, gallium-based, III-V, or ultrawide bandgap semiconductors (the fabrication of gallium-based chips is already banned).
• New prohibition on US person investment in items designed or intended for use with DUV lithography equipment (EUV items are no longer limited to those designed exclusively for EUV).
• Continued prohibition on US person investment in advanced chip design software, advanced fabrication and packaging equipment, advanced packaging of chips, and certain other advanced chips.
• New notification requirement for US person investment in the development or production of chips not otherwise prohibited (reaching, for example, chip testing, integration, and quality assurance), and for the design or production of certain chip design, fabrication, and packaging equipment not otherwise banned.
• Continued notification requirement for US person investment in the design, fabrication, or packaging of chips not otherwise prohibited, including legacy chips.

Second, the NPRM proposes to update and provide additional detail on existing sensitive technology sectors; for example, the types of integrated circuit technologies that are considered “prohibited technologies.”

Notably, whereas existing OISP regulations restrict and prohibit transactions involving AI systems based on the end uses or computing thresholds of such systems, the restrictions in the NPRM are considerably broader. Specifically, the NPRM proposes to expand the definition of a “super intelligence (SI) system” to include “an SI agent harness and an embodied SI or physical SI system (e.g., SI-enabled: industrial robots, bipedal or humanoid robots, quadruped robots, other mobile robots, autonomous vehicles, and unmanned systems).” Additionally, the NPRM proposes to prohibit entirely covered transactions (called “covered national security transactions” under the NPRM) involving the development of any SI system, with limited exceptions for the use of off-the-shelf third-party SI systems for internal, non-commercial purposes.

Next, the NPRM proposes to expand the definition of “country of concern” to include Cuba, Iran, North Korea, Russia, and the Maduro regime of Venezuela (in addition to China, Hong Kong, and Macau).

The NPRM also proposes to add exceptions to the definition of “covered national security transaction,” including for certain otherwise notifiable transactions where neither the value of the covered national security transaction, nor provision of funds or other consideration to the relevant covered foreign person or joint venture, in the aggregate across the preceding 12 months, exceeds a de minimis amount of $50,000. The NPRM also proposes to add exceptions for certain underwriting services, including the temporary acquisition of an equity interest for the sole purpose of facilitating such services.

Finally, as required under the COINS Act, the NPRM proposes to create a process by which interested parties may request non-binding feedback regarding whether a proposed transaction would constitute a prohibited transaction.

Next Steps

As described above, the NPRM’s proposals would significantly expand and update the OISP. Interested parties must submit comments on the proposals by December 7, 2026, after which time Treasury will issue final regulations to implement the COINS Act.