There have been two significant developments in US outbound investment policy in recent weeks: (1) The Comprehensive Outbound Investment National Security Act of 2025 (“the COINS Act”) became law, largely codifying the August 2023 Outbound Investment Security Program (OISP) Executive Order but with some tweaks and (2) The Department of the Treasury (“Treasury”) issued new Frequently Asked Questions (FAQs) adding clarity on some points and potentially compounding ambiguity on others. The OISP seeks to restrict US investment support for certain sensitive technologies in countries of concern.
Key Takeaways
- Current rules continue to govern for the time being. The existing OISP regime (“the Current Outbound Rules”) will remain in force until Treasury issues COINS Act implementing regulations, due no later than March 2027 (“the Future Outbound Rules”).
- No significant expansion of scope of outbound rules. In the main, the COINS Act codifies the Current Outbound rules and does not adopt the much more expansive alternative approaches reflected in some previously proposed legislation (e.g., it does not target offshoring of critical capabilities).
- Favorable for industry and investors; how much will depend on regulations. The COINS Act requires notification of transactions involving identified technologies, authorizing (but not requiring) Treasury to prohibit transactions as well.
- Changes over the Current Outbound Rules are largely favorable to investors and industry, though this will largely depend on how implementing regulations interpret the COINS Act.
- Investment in a company engaged in covered activities may not be enough if the investment is not for the covered activities themselves.
- Ancillary transactions, now including underwriter temporary ownership of shares, are expressly exempt, significantly benefiting financial services industry.
- De minimis transactions are exempt.
- It narrows the circumstances in which investment in activities outside of target countries are covered, even if owned by a national of a target country.
- It authorizes Treasury to create a public database of covered foreign persons engaged in prohibited or notifiable technologies.
- It mandates a process for advisory opinions.
- Expansions of transaction restrictions are likely limited in practical effect.
- The target countries will expand to cover Cuba, Iran, North Korea, Russia, and the Maduro regime (to the extent still relevant), in addition to China. Given existing sanctions regimes, this is likely not to have any impact.
- Expands technology list to cover high performance computers (already covered to a significant degree by the Current Outbound Rules) and hypersonics (likely already an insignificant area of US investment in China today).
- Authorizes entity-based sanctions. The COINS Act authorizes sanctions prohibiting debt and equity transactions with to-be-identified Chinese companies in the defense sector or surveillance technology sector.
- As such, it would not capture many companies engaged in critical technologies, unless there is a significant defense or surveillance component to the business.
- However, facilitation activities could be targeted, unlike the OISP, which excludes “ancillary” transactions even if they facilitate investments that a US person cannot make directly.
- In the meantime, new Treasury FAQs offer a mixed bag, with some helpful clarifications and some compounding of ambiguity.
- The FAQs focus on the publicly traded securities exception, confirming that many follow‑on offerings, certain convertible instruments and equity acquired via subscription agreements can qualify as excepted transactions so long as the US person does not obtain rights beyond standard minority shareholder protections.
- They confirm that underwriting an IPO for a covered foreign person is not a covered transaction if the underwriter does not acquire equity, but IPO underwriting that involves acquiring an equity interest remains subject to the Current Outbound Rules.
- They reverse Treasury’s prior position and now treat a shareholder’s right to nominate directors — where generally available to similarly situated minority shareholders — as a standard minority shareholder protection, bringing more publicly traded holdings within the publicly traded securities exception.
For a detailed analysis, check out the full briefing here.
