US COINS Act expands AI chip export controls while China simultaneously tightens restrictions on outbound AI-related investments.

President Donald Trump has renewed the national emergency underpinning U.S. restrictions on American investment in Chinese artificial intelligence, semiconductor, quantum computing, and hypersonic technology companies. The renewal extends the program’s legal foundation through at least August 9, 2027, preserving a compliance framework that investors in China’s technology sector are racing to navigate before broader rules take effect early next year. The move coincides with China’s announcement of its most extensive trade countermeasures since last October, including drone export controls and sanctions on American entities, further intensifying the competitive landscape in which these investment restrictions operate.

Signed at the White House on August 3 and published in the Federal Register on August 5 as Document 2026-16015 (91 FR 50659), the presidential notice was legally mandatory. Under Section 202(d) of the National Emergencies Act (50 U.S.C. § 1622(d)), a declared national emergency automatically lapses after one year unless actively renewed by the President. Inaction would have terminated the emergency on August 9, 2026, potentially dismantling the statutory and regulatory framework built on Executive Order 14105 precisely as Treasury’s replacement rulemaking remains pending. The two-page notice confirms that Trump is “continuing for 1 year the national emergency declared in Executive Order 14105 with respect to the threat posed by the advancement by countries of concern in sensitive technologies.”

This renewal extends beyond routine administrative procedure. By opting for continuation rather than modification or revocation—options previously reviewed under the administration’s January 2025 America First Investment Policy memorandum—the White House has confirmed that the Outbound Investment Security Program (OISP) will remain fully operational. Investors now face a transitional phase requiring strict adherence to current regulations for ongoing transactions while simultaneously preparing for substantially revised rules that will cover a broader array of technologies and jurisdictions.

What the OISP Requires Right Now

The legal framework extended by this renewal originates from August 9, 2023, when President Joe Biden signed Executive Order 14105 pursuant to the International Emergency Economic Powers Act. EO 14105 directed the Treasury Department to establish the first U.S. government program designed to regulate outbound investment. The regime’s novelty has led legal scholars to characterize it as “reverse CFIUS,” effectively inverting the traditional model of inbound foreign-investment screening.

Treasury’s implementing regulations, codified at 31 C.F.R. Part 850, took effect on January 2, 2025, following an extended notice-and-comment rulemaking process. These regulations classify covered transactions into two tiers. Prohibited transactions, which are strictly barred due to their proximity to sensitive dual-use military applications, encompass investments in Chinese firms developing advanced integrated circuits below specific node thresholds, quantum computing systems exceeding defined coherence benchmarks, and AI models trained above compute thresholds outlined in Part 850. Notifiable transactions, which mandate advance disclosure to Treasury but are not categorically banned, cover a wider range of investments across the same three sectors where a U.S. person holds a minority or less operationally significant stake.

The program applies to any “U.S. person”—broadly defined to include entities organized under U.S. law and their foreign branches, alongside U.S. citizens and permanent residents—who invests in a “covered foreign person” located in China, Hong Kong, or Macau that engages in covered technology activities. Practitioners have highlighted a critical compliance risk: joint ventures established in third countries outside China may still fall under covered transaction rules if the venture utilizes restricted technologies and a Chinese entity maintains meaningful ownership. Violations incur civil penalties of up to twice the transaction’s value, while willful violations can carry prison sentences of up to 20 years.

Shortly after the January 2025 effective date, Treasury initiated active enforcement proceedings against potential violators. Enforcement personnel, composed of former CFIUS staff embedded within Treasury’s Office of Investment Security, have begun contacting transaction parties in a manner practitioners describe as closely mirroring CFIUS’s post-closing inquiry procedures.

What the COINS Act Changes — and When

The renewal’s most consequential compliance impact stems not from what it preserves, but from what it postpones. On December 18, 2025, President Trump signed the Fiscal Year 2026 National Defense Authorization Act, which incorporated the Comprehensive Outbound Investment National Security Act of 2025 (COINS Act) as Title LXXXV. Passed with strong bipartisan support, the legislation signals congressional intent to anchor outbound investment restrictions on enduring statutory authority rather than relying solely on executive emergency powers.

The COINS Act does not take immediate effect. Treasury is required to issue implementing regulations no later than 450 days after enactment, setting a firm deadline of March 13, 2027. Until those rules are finalized, the existing 31 C.F.R. Part 850 regulations remain fully enforceable. Treasury has explicitly advised investors to “continue to act in full compliance” with the current OISP framework during this interim period.

Once implemented, the COINS Act will reshape the investment landscape in three key respects. First, it broadens the scope of covered technologies to include hypersonic systems and high-performance computing/supercomputing, adding them to the existing categories of semiconductors and microelectronics, AI systems, and quantum information technologies. Second, it expands the “countries of concern” designation beyond China, Hong Kong, and Macau to encompass Cuba, Iran, North Korea, Russia, and Venezuela under the Nicolás Maduro regime. Practitioners note, however, that preexisting U.S. sanctions already restrict most investment in these additional jurisdictions, minimizing the rule’s incremental practical impact. Third, the COINS Act authorizes—but does not mandate—the President to utilize IEEPA to impose targeted sanctions on Chinese entities “knowingly engaged in significant operations” within the defense or surveillance technology sectors.

What Investors Must Plan For Before March 2027

The window between now and the COINS Act’s March 2027 rulemaking deadline introduces a distinct compliance uncertainty that the recent renewal does not resolve. Investors targeting Chinese AI, semiconductor, quantum, and prospective hypersonic and HPC companies must now prepare for a shifting regulatory landscape. The precise performance thresholds that will trigger prohibited or notifiable status under the COINS Act—including specific AI compute levels, semiconductor nodes, HPC benchmarks, and hypersonic design specifications—remain undefined, as they will be established through Treasury’s forthcoming rulemaking process. Consequently, a transaction meticulously structured to meet current Part 850 thresholds could face substantially different compliance obligations once COINS Act regulations take effect.

This dual-compliance period imposes concrete planning requirements across several investor categories.

Venture capital and private equity funds with China exposure must assess how the COINS Act’s expansion into hypersonics and HPC could bring previously unregulated portfolio companies under notification or prohibition requirements. Additionally, the legislation suggests potential revisions to the definition of a “covered foreign person,” shifting from a strict 50% ownership threshold toward a “subject to direction or control” standard. According to CRS analysis, this change could expand the pool of investment targets subject to scrutiny.

Institutional investors holding limited partnership stakes in China-focused funds should recognize that the COINS Act, similar to the current OISP, may extend to non-U.S. funds utilizing U.S. capital. This necessitates binding contractual assurances from fund managers regarding the deployment of U.S. person contributions. The Institutional Limited Partners Association (ILPA) has published compliance guidance detailing essential considerations for affected investors.

All impacted investors should prepare to engage in the COINS Act’s notice-and-comment rulemaking process, which must occur prior to Treasury’s issuance of final regulations. The legislation explicitly mandates that Treasury establish a confidential feedback mechanism, enabling investors to request non-public guidance on whether a proposed transaction would be classified as prohibited—a novel provision absent from the original OISP framework.

The COINS Act also introduces enhanced statutory durability: its provisions are scheduled to remain in effect for seven years, mitigating the risk that a future administration could allow the program to lapse through inaction on national emergency renewals.

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