DealLawyers.com Blog

Last week, the Department of the Treasury announced a proposed rule to implement the COINS Act, part of the National Defense Authorization Act for fiscal year 2026 and built on the existing Outbound Investment Security Program framework. Treasury also released this fact sheet and FAQs. This Simpson Thacher alert summarizes the key terms:

The proposed rule retains the core architecture of the [Outbound Investment Security Program] in that it prohibits or requires notification of certain types of transactions with sufficient touchpoints to countries of concern and activity in covered sectors. That said, Treasury’s proposal would significantly expand the program’s reach in terms of both geographic scope and technological areas of focus. Most notably, the proposed rule:

– treats all development of artificial intelligence (now referred to as “super intelligence”) systems as prohibited rather than notifiable, regardless of compute power or use case;
– adds three technology sectors: hypersonic systems, high-performance computing and supercomputing, and biotechnology;
– extends the program to five additional countries of concern;
– broadens the definition of “covered foreign person”; and
– creates, for the first time, a process for parties to seek non-binding feedback from Treasury on whether a specific, live transaction would be prohibited.

The proposed rule also introduces several new exceptions and renames the OIR’s “covered transactions” as “covered national security transactions.”

Comments are due by December 7.

– Meredith Ervine