WASHINGTON, October 23, 2026 — The U.S. Treasury Department proposed a rule Thursday to crack down on American high-tech investments in China, Russia, North Korea, and other designated countries of concern. The move targets capital flows into sectors such as supercomputing and artificial intelligence, aiming to prevent U.S. funds from bolstering the military capabilities of strategic adversaries.
The proposal lands in the middle of a tense economic rivalry between Washington and Beijing. For years, the two nations have restricted the export of sensitive technology and critical products. China has limited its supply of rare earth minerals, while the U.S. has curbed the export of advanced computer chips. Both sides have also imposed tariffs on each other’s goods. President Donald Trump and Chinese President Xi Jinping agreed last year to ease tensions during talks, a temporary truce they extended into January. However, the sparring continues as the U.S. tightens its grip on outbound capital.
Expanding the Outbound Investment Security Program
The new rules build on the Outbound Investment Security Program, or OISP, which took effect on January 2, 2025. This framework originally targeted investments by U.S. persons in specific Chinese entities, focusing on semiconductors, quantum technologies, and artificial intelligence. The program operates in two tiers, with some deals prohibited outright and others requiring notification to Treasury. The initiative traces back to Executive Order 14105, signed by then-President Joe Biden on August 9, 2023. That order set the policy direction, and Treasury spent the following period turning it into enforceable rules.
In December 2025, Congress passed the Comprehensive Outbound Investment National Security Act, known as the COINS Act, to codify and expand the program. The law broadens the OISP in two directions, adding new technology sectors and expanding coverage to additional countries. Among the sectors added are high-performance computing and hypersonic systems, which are capable of traveling at five times the speed of sound. These sit alongside the original focus on chips, quantum, and AI. The law also gives Treasury a deadline to issue new rules by March 2027.
Defining the Scope of Restrictions
The proposed rule would expand restrictions to cover investments in hypersonic systems, supercomputing, biotechnology, and artificial intelligence. Notably, Treasury used President Donald Trump’s favored term for AI, “superintelligence” or SI, in the document. The rule would only apply to investments that exceed $50,000. It would exclude many financial investments, including stock purchases, thereby narrowing the scope of compliance requirements for typical market activities.
The inclusion of Russia in the proposed rule has come days after Trump waived sanctions on Russia following a diesel deal with President Vladimir Putin. The list of countries of concern now includes Cuba, Iran, North Korea, and Russia, in addition to China. This expansion adds a layer of complexity for investors who previously built compliance processes around a single focus on Chinese entities. The immediate stakeholders include venture firms, private equity funds, and corporations with overseas subsidiaries that may have exposure to these sensitive tech sectors.
Enforcement and the First Penalty
Treasury did not wait long to show the program had teeth. On October 7, 2026, the department announced its first civil penalty under the OISP. The target was Amidi, LLC, which Treasury fined $200,000 for failing to report an investment. The investment itself was $92,478, made by Amidi’s Chinese subsidiary into Shanghai Qiongche Intelligent Technology, also known as Noematrix. Noematrix specializes in embodied AI and robotics, a field where software controls machines operating in the real world.
The penalty was more than double the value of the deal that triggered it. The case highlights how investments can flow indirectly, as the money moved through a Chinese subsidiary of a U.S. company rather than directly from an American entity. This indirect flow is a key concern for regulators, as it can obscure the ultimate origin of the capital. The size of the fine signals that Treasury intends to enforce the rules aggressively, even for relatively small transactions that fall under the radar of traditional export controls.
Treasury will hear public comments on the proposal before issuing a final rule. As of updates in October 2026, the department said it planned to release proposed regulations tied to the COINS Act within weeks. The direction of travel looks fairly settled, but the framework could still change before Treasury locks it in. Investors and companies will watch closely to see which additional countries Treasury ultimately names and how precisely it defines covered activities in AI and semiconductors. The March 2027 deadline set by the COINS Act will shape how quickly firms need to adapt their compliance strategies.
Sources
- US Treasury proposes a rule to crack down on high-tech investments in China, other adversaries
- US Treasury proposes a rule to crack down on high-tech investments in China, other adversaries
- US Treasury proposes rules to block American investments in AI and semiconductors
Photo: Laura Ockel / Unsplash (Unsplash License)
