The U.S. Treasury Department has proposed expanding restrictions on American investments in sensitive foreign technologies, aiming to prevent U.S. capital from strengthening adversaries’ military capabilities. The draft targets China, including Hong Kong and Macau, as well as Cuba, Iran, North Korea and Russia. Treasury Secretary Scott Bessent said the measures would strengthen the existing Outbound Investment Security Program.
The proposal encompasses semiconductors, artificial intelligence, quantum technology, supercomputing and hypersonic systems, which can travel at five times the speed of sound. Treasury also added biotechnology under its authority granted by the legislation. Investments exceeding $50,000 would fall within the rule’s scope, although many financial investments, including stock purchases, would be excluded.
Certain transactions would require notification to Treasury, while others would be prohibited. For the AI systems covered by its expanded ban, the proposal would remove investors’ existing option to report transactions rather than face a prohibition. Violations could result in civil penalties, and Treasury could compel investors to sell their holdings.
The initiative builds on restrictions introduced in 2023 under then-President Joe Biden, initially focused on Chinese semiconductors, quantum computing and AI. Congress codified and expanded the program in its 2026 defense bill through the Comprehensive Outbound Investment National Security Act. The proposed regulations would implement that legislation.
The draft is scheduled to appear in the Federal Register on October 26, and written comments are due December 7; final regulations will establish the effective date. China objected to the proposed restrictions as interference in normal commercial cooperation. Foreign Ministry spokesperson Mao Ning said Beijing would monitor developments and take necessary measures to safeguard its interests.
