Key Insights
- The US Treasury proposed AI investment restrictions targeting China, Russia, Iran, North Korea, and Cuba.
- The proposal expands restrictions across six technology sectors, covering biotechnology, semiconductors, and advanced computing.
- A $50,000 threshold exempts certain notifications, while the public comment period ends Dec. 7.
The US Treasury proposed tighter restrictions on American investments in sensitive technologies across five countries on Oct. 22, 2026. The proposal targeted China, Russia, Iran, North Korea, and Cuba, covering artificial intelligence and five additional technology sectors.
The Treasury said the measures would curb financing that could support foreign military and surveillance capabilities. The proposals would prohibit some investments outright while requiring notices for other transactions.
US Treasury Proposal Builds on 2025 Law
The regulations would implement the Comprehensive Outbound Investment National Security Act of 2025, known as the COINS Act. Congress enacted the law on Dec. 18, 2025, as part of that year’s defense authorization legislation.
U.S. Senate records showed lawmakers approved the defense bill’s final House amendment by 77 votes to 20. The legislation broadened an outbound investment program that initially focused on China, Hong Kong and Macau.
The US Treasury first implemented those earlier restrictions in January 2025. The agency now proposes extending coverage beyond semiconductors, quantum computing, and artificial intelligence.
Treasury Secretary Scott Bessent said the plan aimed to stop American capital supporting adversaries’ sensitive technologies. He also said the regulations would offer investors greater clarity.
US Treasury Targets AI Investment and Advanced Chips
The US Treasury proposed banning covered investments in foreign entities that develop artificial intelligence systems in designated countries. Current rules banned some AI investments but required notices for others.
The proposal calls these technologies “super intelligence systems,” following a Sept. 29 executive order. Its restrictions cover existing AI development.
For semiconductors, the proposal would expand prohibitions to advanced integrated circuits and high-bandwidth memory. It would retain notification requirements for certain less-sensitive chip activities.
The US Treasury also proposed restrictions involving quantum algorithms, hypersonic propulsion, and associated testing facilities. Biotechnology provisions would reach selected brain-computer interfaces, biological design technologies, and specialized manufacturing equipment.
These provisions target specified investments and activities, rather than every technology company within the five jurisdictions. Treasury’s draft differentiates investments subject to prohibition from transactions requiring disclosure.
Public Shares and Smaller Deals Have Different Exceptions
The US Treasury outlined several exemptions designed to limit the proposal’s impact on ordinary financial activity. Those exemptions cover qualifying publicly traded securities, exchange-traded funds and selected fund investments.
Under the proposal, eligible limited-partner commitments to non-US investment funds could qualify for a $2 million exception. Other fund arrangements could qualify through binding contractual protections.
A separate $50,000 threshold applies to certain transactions over the preceding 12 months. Treasury’s fact sheet specifies this exception covers notification requirements only, not prohibited investments.
The US Treasury would also exclude certain bank lending, payment processing, and underwriting activities. However, some exemptions would not apply when investments grant governance rights beyond standard minority shareholder protections.
Private equity firms and venture capital investors would therefore face transaction-specific scrutiny. The proposal covers equity acquisitions, certain convertible financing, joint ventures and new facilities.
Investors would evaluate their exposure before proceeding, rather than seek routine advance approval for every covered investment. The draft permits requests for nonbinding feedback about potentially prohibited transactions.
Venezuela Excluded from Five-Country Coverage
The US Treasury identified China, Russia, Iran, North Korea and Cuba as countries covered by the updated proposal. The statute also refers to Venezuela under the administration of Nicolás Maduro.
However, Treasury’s official frequently asked questions said that the administration no longer met the statutory description. The agency cited U.S. recognition of Delcy Rodríguez as Venezuela’s head of state on March 5.
The Treasury nevertheless warned that the proposal could reach certain Venezuelan investments. Coverage can extend to entities outside designated countries through ownership or control relationships.
This qualification means Venezuela’s exclusion does not create an unrestricted exemption for every associated transaction. Investors would still assess the relevant company’s activities and ownership structure.
The Treasury Sets Dec. 7 Comment Deadline
Treasury will accept public comments until Dec. 7, 2026, before preparing final regulations. The agency will announce an effective date separately, leaving existing rules in effect in the meantime.
The US Treasury proposal would require notification within 30 days after completing specified transactions. The same period would apply after investors subsequently learned facts triggering a reporting obligation.
Treasury said it had received approximately 100 investment notifications under its earlier program. The proposed framework also outlines civil penalties, voluntary disclosures and possible compelled divestment for prohibited deals.
Investors now face a consultation period rather than an immediate blanket prohibition on cross-border technology financing. The final rule will determine the precise compliance obligations for future AI investment activity.
