US Treasury Proposes Wider Outbound Investment Curbs on Tech Deals

A new wall around US tech money

The US Department of the Treasury issued a Notice of Proposed Rulemaking on October 22, 2026 that would expand the Outbound Investment Security Program, adding new technology sectors and countries of concern to the restrictions governing certain US investments abroad. In plain terms, Washington wants a bigger say over which foreign tech deals American money can touch.

The proposed rule implements the Comprehensive Outbound Investment National Security (COINS) Act, which Congress passed as part of the Fiscal Year 2026 National Defense Authorization Act. The statute directs the Treasury Secretary to issue regulations that require US persons to notify Treasury of certain transactions involving covered foreign persons engaged in notifiable technologies, and that prohibit US persons from certain other transactions involving covered foreign persons engaged in prohibited technologies.

That two-tier design is the heart of the program. Notifiable deals must be disclosed. Prohibited deals must not happen at all. The proposed rule widens both tiers: more sectors count, more countries count, and the net catches more of the dual-use technology that sits between civilian and military use.

Why Congress acted

In passing the act, Congress described restricting certain outbound investments into dual-use strategic technologies that benefit a foreign adversary's military modernization, surveillance states and human rights abuses as necessary to prevent harm to US national security and foreign policy interests. Treasury Secretary Scott Bessent echoed that framing in the announcement, saying the proposed regulations would strengthen the program to prevent adversaries from using US investment to develop critical technologies that threaten US national security.

Assistant Secretary of the Treasury for Investment Security Christopher Pilkerton said the proposed regulations are designed to address risks that arise when foreign adversaries try to benefit from US investment in key technology sectors. The message is consistent: the concern is not just money changing hands, but the expertise, networks and follow-on funding that travel with it.

This is part of a longer shift. Washington has spent years moving from screening inbound investment to policing outbound investment too, and from company-by-company actions to sector-wide rules. The COINS Act turns what began as an executive program into statute, which makes it harder to reverse and easier to expand. Investors who treated outbound screening as a temporary policy should update that assumption.

What it means for tech companies and investors

For most startups and venture funds, the immediate effect is compliance work, not a shutdown. The practical questions for any deal touching a covered sector or country are now:

• Is this transaction notifiable, prohibited, or neither? The answer depends on the technology, the foreign person involved, and the structure of the deal. Get that classification right before signing, not after.
• What does notification require? Notifiable deals need disclosure to Treasury, which means timelines, paperwork and a paper trail that future deals will be judged against.
• How does this interact with allied regimes? The EU and others run their own investment screening, and a deal can now face parallel reviews on both sides of an ocean.

The risk for companies is less a single blocked deal than a chilling effect on cross-border rounds. A US fund weighing an investment in a foreign AI, semiconductor or quantum company now has to price in regulatory review, possible prohibition and reputational scrutiny. Some deals will still happen. Some will quietly not, which is exactly the outcome the program's designers intend for the riskiest categories.

The proposal is also a reminder that tech regulation is no longer just about what companies do, but about who funds them. The same week saw Washington taking equity stakes in chip companies it funds, as covered in our report on the $389M semiconductor funding deals, and Europe charging KKR over its Telecom Italia deal disclosures in the EU's KKR case. Capital itself is now a regulatory subject.

What happens next

A Notice of Proposed Rulemaking is not a final rule. There will be a comment period, industry pushback, and likely revisions before anything takes effect. Watch for three things: which sectors and countries survive in the final text, how Treasury defines the boundary between notifiable and prohibited technologies, and whether the final rule gives clear safe harbors for ordinary venture investments. Until then, the prudent move for any fund or company with cross-border exposure is to map its portfolio against the proposed categories now, while changes are still cheap.