# Treasury proposes broader AI investment prohibition

> Treasury proposes a broader AI investment prohibition. The current outbound investment rule remains in force.

By BIGCHANGE.AI Editorial

Published: 2026-10-26T04:41:38.364Z
Updated: 2026-10-26T04:41:38.364Z
Canonical: https://bigchange.ai/blog/treasury-coins-ai-outbound-investment-proposal

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Treasury's [October 22 COINS Act proposal](https://www.federalregister.gov/documents/2026/10/26/2026-21786/outbound-investment-security-program-regulations), published October 26, would prohibit specified US investments in foreign developers of defined AI systems. The [current Part 850 rule](https://www.federalregister.gov/documents/2024/11/15/2024-25422/provisions-pertaining-to-us-investments-in-certain-national-security-technologies-and-products-in) remains operative; comments close December 7, 2026.

## The big change

- **What changed:** The draft treats development of any defined “super intelligence” system as prohibited technology. Current rules also have a notifiable AI category based on end use and training compute.
- **Why it matters:** Agent harnesses that extend third-party models can count as development. The proposed prohibition still depends on the investor, transaction, foreign person and technology involved. Strictly internal, non-commercial use of an off-the-shelf system does not count as development solely on that basis.
- **What to watch:** Treasury seeks comment on the AI definition. The final rule will set an effective date; Part 850 obligations remain operative.

## Proposed definition and scope

“Super intelligence” is the proposal's regulatory term for AI systems, not a requirement to show superhuman ability. Its definition covers machine-based systems that generate content or make predictions, recommendations or decisions, as well as applications using them. The draft places development of these systems in prohibited technology and has no AI entry in its separate notifiable technology list.

The proposed prohibition would reach specified US-person transactions involving SI development by a covered foreign person, including through qualifying holding-company relationships or relevant joint ventures. Treasury would assess knowledge using information the investor had or could have obtained through a reasonable and diligent inquiry. Covered transactions include equity, certain debt with equity-like rights, joint ventures and some fund interests. The draft names China (including Hong Kong and Macau), Cuba, Iran, North Korea, Russia and Venezuela under the Maduro regime. Treasury's [accompanying FAQ](https://home.treasury.gov/system/files/206/Fact-Sheet-FAQs-COINS-Act-NPRM.pdf) says Venezuela does not currently meet that last definition, although some investments involving Venezuelan entities could still fall within the proposed rule. Public securities, some limited-partner interests, intracompany transfers and banking services have conditional exceptions.

## The current rule

Part 850 took effect in January 2025. It prohibits covered AI investments tied to specified military, intelligence or mass-surveillance uses or training above set computing thresholds; other covered AI investments can require notification.

## Sources

- [Treasury's proposed rule](https://www.federalregister.gov/documents/2026/10/26/2026-21786/outbound-investment-security-program-regulations) — Full definitions, scope and exceptions.
- [Treasury's COINS proposal FAQ](https://home.treasury.gov/system/files/206/Fact-Sheet-FAQs-COINS-Act-NPRM.pdf) — Explains Venezuela's treatment under the draft.
- [Current outbound investment rule](https://www.federalregister.gov/documents/2024/11/15/2024-25422/provisions-pertaining-to-us-investments-in-certain-national-security-technologies-and-products-in) — Operative Part 850 AI criteria.
- [Treasury's current-program FAQ](https://home.treasury.gov/policy-issues/international/outbound-investment-program/frequently-asked-questions) — Confirms current duties continue pending COINS regulations.