Treasury Proposes Wider Outbound Investment Curbs on Super Intelligence and Hypersonics

The Department of the Treasury’s Office of Investment Security proposed on Monday a rewrite of the U.S. outbound investment regime that would extend screening to super intelligence, high-performance computing, hypersonics and quantum technologies, and add five new countries of concern. The proposal was published in the Federal Register of 26 October 2026 under Docket No. TREAS–DO–2026–0595 and RIN 1505–AC94, and written comments must be received by 7 December 2026.

Congress enacted the Comprehensive Outbound Investment National Security (COINS) Act on 18 December 2025 as part of the National Defense Authorization Act for Fiscal Year 2026, codifying it as Title VIII of the Defense Production Act (50 U.S.C. 4581–4589). The new part 851 would replace the architecture built on Executive Order 14105 of 9 August 2023 (88 FR 54867) and the part 850 regulations issued on 15 November 2024, which created the Outbound Investment Security Program and took effect on 2 January 2025. In roughly 21 months of operation, Treasury has received approximately 100 notifications of semiconductor and super intelligence investments from venture capital firms, asset managers, investment banks and individual investors.

Super intelligence shifts from notification to outright prohibition

The proposal keeps the five technology areas enumerated in Title VIII but reshuffles them between the two tracks. Development of any super intelligence (SI) system would become prohibited technology rather than notifiable technology, a broad ban Treasury says is warranted by the pace of advances in countries of concern; it proposes no technical parameters under which such a transaction could be permitted. An SI system is defined as a machine-based system that, for a given set of human-defined objectives, generates content or makes predictions, recommendations or decisions, including harnesses for agentic capability and embodied systems.

Quantum information technologies would likewise move into the prohibited category, covering:

• Quantum computers, quantum sensing platforms and quantum networks or communications designed for scaling quantum computing, secure communications such as quantum key distribution, or any military, intelligence or mass-surveillance end use.
• Supercomputers providing 100 or more double-precision (64-bit) petaflops or 200 or more single-precision (32-bit) petaflops within an envelope of 41,600 cubic feet or less.
• Hypersonic systems — vehicles or weapon delivery systems capable of sustained atmospheric or very low Earth orbit flight at Mach 5 or greater — plus propulsion, materials, wind tunnels and arc jet facilities, and digital twin and digital thread software.
• Biotechnology, a sector the Secretary added on his own authority, covering sequencing, flow cytometers, mass spectrometry, brain-computer interfaces and biomanufacturing equipment.

Five new countries of concern

Title VIII expands the list beyond the People’s Republic of China, Hong Kong and Macau. The proposal would define country of concern to include:

• The Republic of Cuba.
• The Islamic Republic of Iran.
• The Democratic People’s Republic of Korea.
• The Russian Federation.
• The Bolivarian Republic of Venezuela under the regime of Nicolás Maduro Moros.

On Venezuela, Treasury notes that the Maduro regime no longer exists: on 5 March 2026 the United States recognized Delcy Rodríguez as head of state. The proposal also treats as prohibited technology any notifiable technology pursued by a covered foreign person whose affiliates appear on U.S. government lists, including the BIS Entity List, the Military End User List, the SDN List, the NS–CMIC List and the section 1260H list of Chinese military companies.

Funds, limited partners and the two million dollar line

The text preserves the limited partner exception but gives it numbers. An investment as a limited partner or equivalent in a venture capital fund, private equity fund, fund of funds or pooled vehicle is excepted where committed capital does not exceed a de minimis $2,000,000, aggregated across the fund’s investment and co-investment vehicles, or where the investor holds a binding contractual assurance that its capital will not fund a prohibited or notifiable transaction. Other carve-outs include:

• Publicly traded securities, including index funds, mutual funds and exchange traded funds.
• Transactions not exceeding $50,000 in aggregate over the preceding 12 months.
• Intracompany transfers of funds to a controlled foreign entity, and full buyouts of equity or assets located outside a country of concern.
• Secondary transactions, bank lending, underwriting, prime brokerage and global custody.

Enforcement and next steps

The rule would apply retroactively to activities on or after 2 January 2025 and before the effective date of the final rule, and would require U.S. persons to take all reasonable steps to prevent prohibited deals by their controlled foreign entities. The information collections sit under OMB control number 1505–0282; the notice is signed by Christopher M. Pilkerton, Assistant Secretary for Investment Security, with Meena R. Sharma listed as the contact for the Office of Investment Security for Policy and International Relations.

For readers, the practical effect is a wider net over the capital that reaches foreign chipmakers, model developers and hypersonic suppliers, and a narrower set of safe harbours for the fund structures that channel most U.S. venture money abroad. The 7 December deadline leaves investors roughly six weeks to argue over thresholds that will govern deals closed long before any final rule takes effect.

Source: Federal Register, Vol. 91, No. 205, 26 October 2026, Proposed Rules, p. 67396 (official reference: 2026-21786).