US Treasury proposes expanded restrictions on outbound investment in AI, chips, and biotech
The US Treasury has released a draft regulation to expand restrictions on American investments in critical technology sectors in China, Russia, and other countries deemed adversarial. The proposal targets AI, semiconductors, biotechnology, and other sectors that could pose national security risks, building on existing rules under the Outbound Investment Security Program.
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What the new regulations aim to restrict
The US Treasury’s draft regulation seeks to expand restrictions on American investments in specific technology sectors in countries deemed adversarial. These sectors include artificial intelligence, semiconductors, quantum technology, supercomputing, hypersonic systems, and biotechnology. The rule is part of the Outbound Investment Security Program, established in 2023 under an executive order by former President Joe Biden.
The proposal implements the COINS Act, passed as part of the 2026 defense bill. It adds biotechnology to the list of restricted sectors, which previously included chips, AI, quantum technology, supercomputing, and hypersonic systems. The draft also replaces the term 'AI systems' with 'super intelligence systems,' reflecting a 2026 executive order that redefined high-risk AI capabilities.
Countries and sectors targeted
The draft regulation identifies China (including Hong Kong and Macau), Russia, North Korea, Iran, Cuba, and Venezuela under Nicolás Maduro as 'countries of concern.' However, Venezuela does not currently meet the criteria outlined in the draft, meaning it may not face immediate restrictions.
Investors would face bans on certain deals in the targeted sectors, with violations potentially resulting in penalties under the International Emergency Economic Powers Act. The Treasury could also compel investors to divest from restricted transactions.
Timeline and public input
The US Treasury will publish the draft regulation in the Federal Register on 26 October. The public has until 7 December to submit comments before the final rules are issued. This timeline provides a window for stakeholders to shape the final implementation of the restrictions.
Broader context of technology controls
The proposal follows China’s announcement of controls on exporting advanced AI models and chip designs, issued six days before the US Treasury’s draft. Emil Michael, the Pentagon’s technology chief, has suggested that export controls could play a role in curbing the development of AI labs, signaling a broader strategy to limit technological advancements in adversarial nations.
What this means
Lazyfounder analysis — our interpretation, not reported fact.
For founders and operators, particularly those in AI, semiconductors, biotechnology, and quantum technology, these proposed rules signal a tightening regulatory environment for cross-border investments. The expansion of restricted sectors—especially the addition of biotechnology—could limit opportunities for ventures already navigating export controls and sanctions. Companies with supply chains, partnerships, or investments in China or other targeted countries may need to reassess their exposure and compliance strategies.
The inclusion of 'super intelligence systems' as a category also reflects a shift in how high-risk AI capabilities are defined, which could influence future regulatory frameworks. Startups developing advanced AI or biotech solutions should monitor the final rules closely, as they may need to adjust fundraising, M&A, or international expansion plans to align with the new restrictions.
Related on Lazyfounder
Sources
- The Next Web · 2026-10-25
US Treasury moves to curb AI, chip and biotech deals in China and Russia
This story is an original summary drafted with AI by Lazyfounder from the reporting listed above and checked by automated validation. Facts are attributed to their original publishers; sections marked as analysis are Lazyfounder's. Where a source is in another language, facts were machine-translated and quotations are reported, not reproduced. Read the original coverage via the links, and see our AI policy and corrections policy.
About the author
Editor, Lazyfounder
Tarun Mottlia edits LazyFounders, covering Indian startups, funding rounds, AI and product launches. Every story on the site is AI-assisted and checked against its cited sources before publication.
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