The U.S. Department of the Treasury released a notice of proposed rulemaking on October 22, 2026 to implement the Comprehensive Outbound Investment National Security Act of 2025, known as the COINS Act. The proposal, issued together with a Fact Sheet and FAQs, would sharply expand the technological and geographic reach of the existing outbound investment screening regime. Comments are due by December 7, 2026.

The Proposed Rule builds on the Outbound Investment Security Program, the Existing Rule that already prohibits U.S. persons from making certain technology-related investments with respect to China. Treasury Secretary Scott Bessent framed the intent directly. He said the Proposed Rule "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."

Until a final rule takes effect, the Existing Rule remains in force. Companies and investors therefore face two overlapping compliance baselines: the current program today, and a broader regime that may follow once Treasury finalizes the rulemaking.

What changes for artificial intelligence investments?

The most consequential shift concerns artificial intelligence. Under the Existing Rule, certain investments in AI are prohibited outright, while others fall into a notification category that requires disclosure to Treasury rather than a prohibition.

The Proposed Rule would eliminate the notification category altogether. The practical effect is that all covered investments — those involving covered foreign persons — in companies that develop AI systems would become prohibited. In practical terms, a deal that today triggers only a filing duty could, under the final rule, be barred entirely.

This removes a middle path that many investors have used to preserve deal flow while remaining compliant. Multinationals structuring AI-related capital deployment into covered jurisdictions will need to reassess whether transactions now qualifying for notification would instead be blocked.

Why does biotechnology raise legal questions?

The second notable expansion is biotechnology. The Proposed Rule would add biotechnology as a prohibited sector under the outbound investment program.

That addition is legally significant for a specific reason: the COINS Act, the underlying statute, does not name biotechnology as a covered sector. Treasury is therefore proposing to extend the program beyond the sectors expressly enumerated by Congress. Observers, including the Paul Hastings authors who analyzed the proposal in a November 10, 2026 client alert, flagged the AI and biotechnology provisions as the most notable aspects of the rulemaking.

For life sciences investors and strategic acquirers, the addition of an unnamed sector signals that the program's perimeter may be defined by regulatory discretion as much as by statutory text.

How does the geographic scope expand?

Beyond new technology categories, the Proposed Rule would expand the program's geographic scope. The Existing Rule anchors its restrictions to China. The Proposed Rule's broader geographic reach follows the COINS Act's framework, which directs attention to adversary development of critical technologies rather than a single named jurisdiction.

For multinational companies, that means country-risk mapping built around China alone may understate future exposure. Investment screening analysis will need to track how Treasury defines covered foreign persons and covered jurisdictions in the final rule.

What should companies and investors do before December 7, 2026?

The comment period, open until December 7, 2026, gives stakeholders roughly six weeks from the proposal's release to shape the final text. Several practical takeaways follow from the proposal's structure:

• AI portfolio review. Investors with positions in AI developers that currently fall under notification should model the consequences of full prohibition.
• Biotechnology exposure. Firms active in life sciences should assess whether pending or pipeline deals could fall within a prohibited sector not named in the statute.
• Geographic screening. Compliance programs calibrated to the China-focused Existing Rule should be tested against the Proposed Rule's wider geographic scope.
• Dual-track compliance. Because the Existing Rule remains in effect until a final rule takes effect, current obligations continue unchanged during the transition.

The Proposed Rule does not yet have the force of law. But its direction is clear: fewer notification off-ramps, more prohibited categories, and a wider map of covered transactions. Treasury has set December 7, 2026 as the date by which the investment community must respond.