President Signs New Outbound Investment Law

On December 18, 2025, President Trump signed into law the Fiscal Year 2026 National Defense Authorization Act (NDAA), which includes the Comprehensive Outbound Investment National Security Act of 2025 (COINS Act). The COINS Act codifies and expands the scope of the Outbound Investment Security Program that is currently in effect under 31 C.F.R. Part 850.

Importantly, these changes do not come into force immediately and thus the existing Outbound Investment Security Program will remain in effect until the U.S. Department of the Treasury issues implementing regulations, which Treasury is directed to do no later than 450 days of the passage of the bill, i.e., March 2027.

Key Changes

• Adds new covered technologies to include hypersonic systems, high-performing computing and supercomputing. Technical parameters will be clarified in implementing regulations.
• Expands geographic scope of restrictions to include Cuba, Iran, North Korea, Russia and Venezuela under the Maduro regime, in addition to the People’s Republic of China (PRC) (including Hong Kong and Macau).
• Brings entities “subject to the direction or control” of covered foreign persons into scope (i.e., entities that are less than 50 percent owned by covered foreign persons), potentially broadening the number of entities subject to U.S. person investment restrictions.
• Grants broad authority to the Secretary of the Treasury to identify additional covered transactions and covered technologies that contribute to or enable the military, intelligence, surveillance or cyber-enabled capabilities of a country of concern.
• Adds new categories of “excepted transactions,” including certain ancillary transactions by financial institutions (including underwriting services), among others. We expect the scope of excepted transactions to be further clarified by Treasury’s implementing regulations.
• Expands “covered national security transaction” to include U.S. persons “knowingly directing” notifiable transactions by non-U.S. persons (e.g., their foreign employer), whereas existing rules prohibit a U.S. person from knowingly directing a prohibited transaction.
• Mandates Treasury to establish a process for a person to request non-binding feedback on a confidential basis, or as anonymized guidance to the public, regarding whether a transaction would constitute a covered national security transaction in a prohibited technology.
• Authorizes Treasury to establish a publicly accessible, non-exhaustive database of covered foreign persons that are engaged in a prohibited technology or notifiable technology, as well as a petition process for entities seeking removal from the database.

Background

The Outbound Investment Security Program (OISP) took effect on January 2, 2025, implementing President Biden’s August 9, 2023 Executive Order. Under the OISP, U.S. persons are prohibited from undertaking, or must notify Treasury regarding, certain investments involving entities having a sufficient nexus to the PRC, including Hong Kong and Macau, and that are engaged in certain activities involving semiconductors and microelectronics, quantum information technologies, and artificial intelligence.

While the COINS Act largely codifies the existing OISP, its passage is a significant milestone in a long-running effort by Congress to establish an outbound investment statute.  The COINS Act also modifies the scope and operation of the underlying legal authority to the outbound investment restrictions, which will result in different types of transactions being captured (and excluded) by these restrictions as well as directing Treasury to adjust how it engages with investors seeking to comply with these rules.

Key Differences Between COINS Act and Outbound Investment Security Program

1. Expansion of Covered Technologies, Geographic Scope and Entities

Additional Covered Technologies

The COINS Act adds high-performance computing and supercomputing and hypersonic systems to the list of covered technologies, in addition to the sectors currently covered under the rule: semiconductors and microelectronics, quantum information technologies, and artificial intelligence.

Further, the COINS Act grants the Secretary of the Treasury authority to identify additional types of prohibited or notifiable technologies that the Secretary determines enable the military, intelligence, surveillance or cyber-enabled capabilities of a country of concern. Accordingly, moving forward, Treasury can opt to expand the scope of covered technologies without need for further legislation.

Expanded Geographic Scope

The geographic scope of “countries of concern” is expanded beyond the PRC to include Cuba, Iran, North Korea, Russia and Venezuela under the Maduro regime. However, the practical impact may be limited for many investors given that most of the newly added countries are subject to U.S. sanctions that already prohibit the same transactions covered by the COINS Act.

Expanded Definition of Covered Foreign Person

The definition of “covered foreign person” is broadened to include a person that is “subject to the direction or control of”

1. a country of concern;
2. a person incorporated in, has a principal place of business in or is organized under the laws of a country of concern;
3. a member of the Central Committee of the Chinese Communist Party or member of the political leadership of a country of concern; or
4. the state or the government of a country of concern (including any political subdivision, agency or instrumentality thereof).

The addition of the “subject to the direction and control of” standard indicates a potential expansion that may capture entities that are not covered under the OISP, such as, for example, entities where a covered foreign person holds certain control rights but less than 50 percent ownership. We anticipate Treasury’s rulemaking will provide further clarity on which entities are captured under this standard.

Notably the definition of covered foreign person under the COINS Act does not include entities that derive more than 50 percent of their revenue or income or that incur more than 50 percent of their capital expenditures or operating expenses from a covered foreign person. Those entities are included in the definition of covered foreign person under the OISP.  Because Treasury maintains discretion in how it chooses to implement the law, it remains possible that Treasury will maintain that category of covered foreign persons under the revised implementing regulations.

2. Knowingly Directing Notifiable Transactions

Under the existing OISP, U.S. persons are prohibited from knowingly directing a transaction by a non-U.S. person that a U.S. person would be prohibited from engaging in directly.  This restriction manifests most commonly in scenarios where a U.S. person holds a senior executive officer or director position with a non-U.S. company and has the authority to participate in decisions on behalf of that entity, including with respect to directing, ordering, deciding upon or approving a transaction.

The COINS Act now brings within scope transactions involving a U.S. person “knowingly directing” notifiable transactions as well as prohibited transactions.  It is not clear what requirements will be associated with knowingly directing notifiable transactions, which will be covered by the updated implementing regulations.  In the meantime, it will remain critical for foreign companies with U.S. person executives or directors to establish robust recusal policies to ensure their U.S. person executives and directors do not “knowingly direct” prohibited transactions and to be prepared to expand those policies to address the new requirements associated with “knowingly directing” notifiable transactions. 

3. Expansion of Excepted Transactions

The COINS Act adds new and expands existing categories of “excepted transactions,” including:

• Transactions secondary to covered transactions: The COINS Act creates a new broad exception for transactions “secondary to a covered national security transaction,” including contractual arrangements, procurement of material inputs, bank lending, payment processing, clearing, or sending of payments, underwriting services, debt rating services and prime brokerage services, among others.  Notably, Treasury considers many of these transactions to be currently outside the scope of the OISP.  Treasury declined to expressly exclude such transactions because, in many cases, the rule would not cover the above set of transactions as a threshold matter.¹
• Ancillary transactions by financial institutions (including underwriting services): Similarly, the COINS Act creates a new express exception for “ancillary transactions undertaken by financial institutions,” many of which already fall outside the scope of the OISP for the reasons explained above, with the notable exception of certain underwriting services. The set of excepted ancillary transactions by financial institutions covered by the COINS Act includes: underwriting services (including temporary equity acquisitions for the sole purpose of facilitating underwriting), payment settlement, processing, clearing, credit rating services and other services ordinarily incident to the provision of financial services. Under the current OISP, Treasury has advised in both the Final Rule and its FAQs that the OISP covers an underwriter’s acquisition of an equity interest in a covered foreign person that is not yet publicly traded as part of its underwriting services.² We expect the scope of the exception of underwriting services, along with exceptions, to be further clarified by Treasury’s implementing regulations.
• De minimis transactions: The COINS Act excludes de minimis transactions but grants the Secretary of the Treasury the authority to determine the value of what is considered de minimis. 
• Ordinary business transactions: The COINS Act further excepts “ordinary or administrative business transactions,” and directs the Secretary of the Treasury to determine the transactions to be excepted under this term.  As with the new exceptions for secondary transactions and ancillary transactions, many of the transactions that we anticipate will be identified under the updated implementing regulations are likely already excluded from coverage under the OISP.

4. Informal Guidance Process

The COINS Act directs Treasury to establish a process allowing parties to request non-binding feedback on a confidential basis, or as anonymized guidance to the public, regarding whether a transaction would constitute a covered national security transaction in a prohibited technology. The current OISP notably does not provide any mechanism for parties to a transaction to request guidance from Treasury. Having the means to seek non-binding feedback before engaging in (or declining to engage in, as the case may be) borderline transactions should assist investors and bring the OISP in line with other similar regulatory regimes that provide for such processes.

5. Public Database of Covered Foreign Persons

The COINS Act authorizes (but does not require) Treasury to establish a publicly accessible, non-exhaustive database identifying covered foreign persons engaged in prohibited or notifiable technologies. Treasury is also authorized to establish a petition process for entities seeking removal from the database. This represents a potential departure from Treasury’s current position in the Final Rule implementing the OISP, where Treasury declined to create such a list, citing concerns that it would be underinclusive and could mislead parties into assuming that unlisted entities are not covered foreign persons.

6. Multilateral Engagement

The COINS Act directs the Secretary of the Treasury to conduct bilateral and multilateral engagements to promote and increase coordination with the governments of allies and partners. This could result in similar outbound investment screening regimes in other countries, potentially increasing the compliance burden on investors engaged in cross-border transactions.

Conclusion

Once implemented, the changes mandated by the COINS Act will both add new burdens and provide relief to investors. The COINS Act contemplates that Treasury will make these updates through the regular notice and comment rulemaking process, which will provide an opportunity to bring to Treasury’s attention any issues or concerns with the current OISP. It will be important, therefore, for U.S. investors and other impacted stakeholders to closely monitor any forthcoming Treasury actions and consider submitting comments at the appropriate time.

^{1 See 89 Fed. Reg. 90398, 90439 (published November 15, 2024).} 

^{2 See 89 Fed. Reg. 90398, 90416 (published November 15, 2024) and U.S. Dep’t of the Treasury, Outbound Investment Security Program FAQs Example 1.3 under Section III.1 (2025).}