The COINS Act and the New Era of Outbound Investment Controls
The landscape of American capital flow has fundamentally shifted with the passage of the Comprehensive Outbound Investment National Security Act of 2025 (the “COINS Act”), signed into law on December 18, 2025, as part of the FY 2026 NDAA. This legislation transitions the U.S. “Reverse-CFIUS” regime from a temporary executive measure into a permanent, statutory pillar of national security.
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he landscape of American capital flow has fundamentally shifted with the passage of the Comprehensive Outbound Investment National Security Act of 2025 (the “COINS Act”), signed into law on December 18, 2025, as part of the FY 2026 NDAA. This legislation transitions the U.S. “Reverse-CFIUS” regime from a temporary executive measure into a permanent, statutory pillar of national security.
Key Takeaways:
The Reverse-CFIUS Pathway to Law
For roughly a decade, lawmakers have explored and advanced proposals for a “Reverse-CFIUS” regime. The specific pathway for the COINS Act begins with President Biden’s Executive Order 14105 of August 9, 2023, declaring a national emergency over certain U.S. investments in “national security technologies and products” in “countries of concern” (China being the only named country). Following this EO, Treasury issued an advance notice of proposed rulemaking (ANPRM) in August of 2023, outlining basic concepts such as covered transactions, covered foreign persons, and technology scope to solicit industry comments. In June of 2024, Treasury followed up with a Notice of Proposed Rulemaking (NPRM), proposing specific prohibitions and notification requirements for outbound investments and triggering an intensive public comment process by financial institutions, corporates, and trade groups. See our blog post for prior discussion of this initial “Reverse-CFIUS” framework. On November 15, 2024, Treasury issued a final rule with an exhaustive preamble establishing the Outbound Investment Security Program (the “OISP”) that became effective on January 2, 2025.1 In addition, Treasury published OISP FAQs on December 13, 2024, and has updated them continuously.
In parallel to this groundwork, Congress debated multiple bills aimed at codifying these concepts, including in the form of the Senate’s Foreign Investment Guardrails to Help Thwart China Act of 2025 (the “FIGHT China Act”). Ultimately, COINS became the agreed upon version that was included in the FY 2026 National Defense Authorization Act (NDAA), signed into law by President Trump on December 18, 2025.2 COINS now forms part of the Defense Production Act of 1950, aligning it with the long-standing CFIUS regime.
The Congressional Message to the President and Treasury
The COINS Act contains a remarkable bipartisan “sense of Congress” statement signaling to the President and Treasury that they should implement and interpret Reverse-CFIUS robustly:
This strong mandate sets the stage for even more appropriations and more legislation that would build out the Reverse‑CFIUS regime.
Two Regimes in One: Ad Hoc IEEPA and Core Reverse-CFIUS
Following the sense of Congress declaration in subtitle A of the Act, the remaining legislative structure comprises three distinct subtitles:
It is important to distinguish subtitle B and subtitle C because they create two parallel regimes for outbound investment.
Under subtitle B, Congress affirms the President’s power under the IEEPA but confines it to a single country of concern - the People’s Republic of China (including the Hong Kong and Macau Special Administrative Regions) whereas the core “Reverse-CFIUS” regime in subtitle C also reaches:
These countries were added by the House in transforming the FIGHT China Act into the COINS Act.
Subtitle B also defines covered foreign persons more narrowly, limiting coverage to actors “knowingly engaged in significant operations in the defense and related materiel sector or the surveillance technology sector of the economy of a country of concern.”
In practice, the IEEPA‑based regime in subtitle B gives the President substantial, ad hoc outbound‑investment control authority that parallels - but does not duplicate - the core “Reverse‑CFIUS” regime under subtitle C. The two parallel regimes operate in tandem, allowing the President to intervene directly under IEEPA while Treasury administers the core screening program under subtitle C.
The Core Reverse-CFIUS Regime
Under the existing OISP, a convoluted set of definitions are used for the basis of the framework (i.e., notifiable and prohibited transactions are a subset of covered transactions made with covered foreign persons engaging in covered activities that are broken out into notifiable and prohibited categories, respectively). Under the COINS Act, covered national security transactions serve as the primary definition and notification or prohibition status turns on whether such transactions are in notifiable or prohibited technology.
National security transactions include the following when engaged in directly or indirectly3 by U.S. persons, their controlled foreign entities4, or certain individuals with respect covered foreign persons:
Under the existing OISP, notifiable and prohibited technologies are identified with detailed narratives and technical thresholds in the areas of semiconductors, AI systems, and quantum computing. See our prior blog for a table summarizing technical thresholds. By contrast, the COINS Act only provides the following headings for notifiable and prohibited technology:
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The statutory language recognizes the detailed technical thresholds under the OISP and directs Treasury to supplement those areas not already covered. This suggests that the existing OISP standards will largely stay intact, with near‑term development focused on the two newly elevated categories of supercomputers and hypersonic systems.
In addition, as noted above, the House bill that transformed the Senate’s FIGHT China Act into the COINS Act deleted the former’s exhaustive listing of technologies and their technical thresholds. It is possible that the FIGHT China Act listings of technology foreshadow the next likely set of technologies that might be added to Treasury regulations or subsequent legislative developments. For example, the FIGHT China Act contained broader technologies such as: semiconductor manufacturing equipment, advanced materials, quantum components, combat simulation software, chemical, biological, radiological, nuclear weapons design, text, audio, video mining and analysis, facial recognition and tracking, digital forensics and penetration testing, robotic control systems, broader avionics systems besides hypersonics, and cross references to existing lists such as the ITAR Munitions List, nuclear regulations, and other EAR items.
The COINS Act also appears to keep intact the Treasury rule which places a notifiable technology into a prohibited technology class by reason of any party appearing on the Entity List, Military End User List (and the Military Intelligence End-User definition), SDN List (including application of the 50 Percent Rule), Non-SDN CMIC List), or the Designated foreign terrorist organization list.
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Where the OISP used a more elaborate test to identify covered foreign persons that combined persons of countries of concern with additional metrics seemingly aimed at capturing Variable Interest Entity–type structures, the COINS Act adopts a more straightforward definition of a foreign person that:
The COINS Act introduces a de minimis exception, departing from the OISP which expressly decided against it. The value of this exception will need to be set by Treasury. The limited partner de minimis exception was retained but without a value. Presumably, the committed capital threshold of $2,000,000, aggregated across any investment and co-investment vehicles of a fund remains intact. Apart from retaining the original exceptions (i.e., certain public company investments, registered securities, derivatives in same, buy-outs, and other day-to-day transactions), other notable additions include secondary transactions such as the temporary acquisition of an equity interest for the sole purpose of facilitating an underwriting.
More Direct OSINT Platform Involvement
The COINS Act introduces a number of new features that would leverage ownership data provided by non-governmental OSINT platforms. Specifically, Treasury is encouraged to develop a publicly accessible, non-exhaustive database that identifies covered foreign persons that are either engaged in a prohibited technology or a notifiable technology. To be clear, the database would in no way relieve U.S. persons from “reasonable and diligent inquiry” under the OISP knowledge standard. It would also not relieve U.S. persons from obligations to use available public and commercial databases to identify and verify relevant information on an investment target or other relevant transaction counterparty as such is reiterated in the OISP FAQs. Once established, the new public database would be interactive insofar as providing various mechanisms for companies and the public to assist in its build-out and revision. A petition system is authorized for parties to request removal from the database. In addition, non-governmental parties will be able to interact with the database by submitting data rising to the level of evidence regarding whether a foreign person is a covered foreign person in a prohibited technology or notifiable technology for inclusion in the database.
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Similarly, Treasury is directed to elevate its “non-notified activities” tasks into a formal program. Treasury is expected to reach out to various sources available to it for purposes of independently discovering national security transactions in a prohibited technology or a notifiable technology that escaped notification. This is coupled with a mandate for establishing a formal non-binding feedback program. Under this program, parties can request to receive non-binding feedback on a confidential basis as to whether a transaction would constitute a covered national security transaction in a prohibited technology. In addition, Treasury may choose to publicize such guidance by anonymizing it.
Aspirational Seeds for Multilateral Expansion
An under‑discussed portion of the COINS Act deals with aspirational multilateral arrangements that could, if taken seriously, evolve “Reverse‑CFIUS” into something akin to Treasury’s worldwide FATCA program. By instructing Treasury to pursue “bilateral and multilateral engagement” with allies, “mechanisms for sharing information, including trends” related to covered activities and to cause other governments to “develop similar mechanisms of their own”, the statute expressly contemplates exporting outbound‑investment controls globally. Indeed, a formal strategy on this subject is required from Treasury within one year of enactment and annually thereafter. If these aspirational goals were actually followed, they could result in a major, wide‑sweeping policing of global capital flows into sensitive technologies as pervasively as FATCA reshaped global tax transparency. To date, Treasury has indicated that it has formulated OISP in consultation with the G7 and other allies.
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Reports to Congress
The COINS Act requires Treasury to submit annual reports to the following Congressional committees: the House Committee on Financial Services (HCFS), the House Committee on Foreign Affairs (HCFA), the House Committee on Appropriations (HCA), the Senate Committee on Banking, Housing, and Urban Affairs (SBHA), and the Senate Committee on Appropriations (SCA). These reports must list all enforcement actions taken during the preceding year and, for each action, identify: the prohibited or notifiable technology involved, the covered national security transaction, the covered foreign and U.S. persons connected to the transaction as well as collated summaries of all notifications submitted. In addition, Treasury is required to provide analysis of trends involving prohibited and notifiable technologies, types of covered national security transactions, and countries involved. These reports are to be followed up by testimony before the SBHA, HCFA, and HCFS to address enforcement and broader trends in international capital flows. The Act is mixed as to detailed confidentiality and classification requirements of these reports. Certain requirements apply but it appears substantial components will be provided in unclassified form.
Strategic Feedback System for U.S. Industrial Policy
Treasury is directed under the COINS Act to make recommendations for expanding existing Federal programs to support production or supply of prohibited and notifiable technologies in the United States and the investments needed to enhance these technologies and reduce U.S. dependence on countries of concern. These recommendations will follow detailed analysis of investment patterns, technology transfer risks, and supply chain vulnerabilities identified through the new regime. Intelligence about capital flows to adversaries is expected to be re-purposed for these industrial policy purposes (i.e., insufficient domestic alternatives or competitive disadvantages that drive capital offshore despite national security concerns). This feedback loop would shape implementation of the CHIPS and Science Act, the Inflation Reduction Act, the Defense Production Act, and future such programs.
Codified Penalties
Penalties are now more robust coming directly from legislation instead of being sought through more general IEEPA authority. These include civil penalties greater than either $250,000 or twice the transaction value that forms the basis of the violation. Leniency is available for self-identified violations. In addition, Treasury now clearly has compulsory divestment authority, to force the unwinding transactions.
1 31 CFR Part 850.
2 Technically, the COINS Act does not simply replace the OISP. Treasury is directed to revise OISP (within 450 days) in accordance with the new code and in the interim OISP remains in full force as is. Full COINS Act impact may not occur until these revisions are issued by Treasury.
3 Indirect transactions include tiered structures, standard “acquisition vehicle” structures, and through natural persons.
4 The definition of controlled foreign entities was not included in the COINS Act. The OISP definition provides that where the relationship between an entity and another entity is that of a parent and subsidiary, the voting interest or voting power of the board of a subsidiary will be fully attributed to the parent (parent being a U.S. person that directly or indirectly holds more than 50 percent of the outstanding voting interest or voting power of the board of the entity).
