US expands its investment restrictions on AI and chips in China and Russia

The US Department of the Treasury published draft new rules expanding the Outbound Investment Security Program, aiming to prevent adversaries from using US investment to develop sensitive technologies. Treasury Secretary Scott Bessent said the proposed rules strengthen the existing program to prevent US investment from being used to develop sensitive technologies that threaten national security.

The draft proposal, published Thursday, targets China, Russia, North Korea, and other nations described as "countries of concern," according to the Associated Press. The program began in 2023 when then-US President Joe Biden signed an order restricting certain US investments in Chinese chips, quantum computing, and artificial intelligence.

The proposal implements the COINS Act, which Congress passed as part of the 2026 defense bill. The law names five sectors: chips, AI, quantum technology, supercomputing, and hypersonic systems, while the Treasury exercised its authority to add biotechnology. The list of countries expands to include Cuba, Iran, North Korea, Russia, and Venezuela, alongside China, Hong Kong, and Macau. The draft replaces the phrase "AI systems" with "super-intelligence systems," and expands prohibitions to include reporting options for certain transactions instead of solely banning them.

Violating the rules could incur civil penalties up to the maximum permitted under the International Emergency Economic Powers Act, and the Treasury could force investors to divest their stakes. The draft will be published in the Federal Register on October 26, with written comments accepted through December 7, after which final rules will be issued to specify an effective date. The proposal comes six days after China proposed its own controls on exporting advanced AI models and chip designs.

What do these terms mean?

Outbound Investment: Injecting funds into companies or assets outside the investor's country; some of these transactions may be subject to government oversight if they touch upon sensitive sectors.

COINS Act: US legislation providing the Treasury with tools to monitor investments in sensitive technologies in rival countries, including requiring reporting on some transactions and prohibiting others.

Super-intelligence: A term used by the current US administration to refer to advanced artificial intelligence systems that may exceed human capabilities in specific tasks.