The Fiscal Year 2026 National Defense Authorization Act (NDAA) includes a statutory framework called the Comprehensive Outbound Investment National Security Act of 2025 (COINS Act) that establishes more rigid regulations pertaining to outbound investments made by U.S. citizens in technology sectors.
Industry analysts said the COINS Act within the NDAA, which was passed by Congress and signed by President Donald Trump on Dec. 18, 2025, could have domestic national security repercussions. The original statutory framework surrounding such investments and the revision of outbound investment regulations took effect on Jan. 2, 2025. The COINS Act will be in place for seven years after enactment unless reauthorized by Congress, with the Treasury having 450 days to issue implementing regulations.
The COINS Act requires U.S. persons to notify the U.S. Department of Treasury about certain categories of investments, defined as “covered transactions,” undertaken by U.S. persons in “countries of concern” including Cuba, Iran, North Korea, Russia and Venezuela under the Nicolas Maduro regime. It’s an expansion beyond just China, Hong Kong and Macau.
However, critics have noted that currently existing U.S. sanctions in such nations equates to lesser impact made by the regulations within the COINS Act. Also, the NDAA stipulates that “covered transactions” undertaken by U.S. individuals in identified sectors that pose a particularly acute threat to national security will be prohibited.
Matthew Rabinowitz, a partner at Washington D.C.-based law firm Pillsbury, told Military.com that the COINS Act is effectively the inverse of the Committee on Foreign Investment in the United States, or CFIUS, in which the Treasury regulates foreign investments in U.S. business and real estate companies for security threats.
“There was already, through executive order, a set of regulations by the Treasury Department that sets forth prohibited notifiable transactions if you're a U.S. person making an investment in, let's say, a Chinese AI company,” Rabinowitz said. “Now, this law codifies those regulations as they have a statutory underpinning and requires (the) Treasury to implement further regulations that will slightly modify and slightly expand the scope of what's currently in place.
“This is building upon what's already in place via regulation to both prohibit or require filings with the Treasury for U.S. persons investing in certain types of companies overseas. This is more recent territory, this is pretty new.”
Military.com reached out to the U.S. Treasury for comment.
COINS Act Provisions
The COINS Act broadly describes “covered national security transactions” including acquisitions of equity or contingent equity, debt arrangements, convertible debt, entrance into a joint venture with a covered foreign person, asset acquisitions or greenfield projects, or the acquisition of a limited partner or equivalent interest in a pooled investment fund like venture capital or private equity.
The COINS Act also revises the definition of “covered foreign person” to include any foreign person that is:
- incorporated in or has a principal place of business in, or is organized under, the laws of a country of concern;
- a member of the Chinese Communist Party' Central Committee or of the political leadership of a country of concern;
- the state or the government of a country of concern, as well as any political subdivision, agency or instrumentality thereof.
The COINS Act also adjusts the previous 50% rule for “covered foreign persons” based on a formula of 50% of revenue, net income, capital expenditure or operating expenditure—with a 50% rule that applies to U.S. individuals owned 50% or more by foreign entities.
What's New
The COINS Act was codified in the latest NDAA to ensure that different presidential administrations can't just repeal, revoke or change on a whim, Rabinowitz said.
He said the etymology of the COINS Act began from a standpoint of the U.S. wanting to better protect itself security-wise, which equates to identifying foreign interests that could be acquiring U.S. businesses or investing in them and getting access to their technology.
“You start thinking about the flip side of that: ‘OK, that's great, but what about U.S. companies, investment funds or PE (private equity) or other sort of brain power that's being used—like thinking about China, Chinese AI, Chinese semiconductors, in a way that furthers those sectors in a way that could harm U.S. national security interests,” he said.
The U.S. has made strides of where it was and where it is now relating to quelling national security concerns of domestic and foreign investments, with a push from Congress to align regulations that Rabinowitz said are “closely aligned” to the initial statute.
The difference now is broader coverage. The current rules from January 2025 remain in effect but the COINS Act effectively makes the law more effective. Now, the U.S. Treasury has up to 450 days to issue new or amended regulations that implement what's in the law passed in the NDAA.
Also, expanded regulatory coverage allows for more oversight over areas including semiconductors, AI, quantum information technologies, high-performance supercomputing and hypersonic systems.
AI Impacts, Long-Term Goals
The tech sector is “widely impacted” from previous and now more current, stringent regulations notably due to the ubiquitous presence of AI technologies, Rabinowitz said.
That means the AI sector will be impacted on the investment side and could hinder a company on the commercial side, or an individual entrepreneur that's serving on multiple boards. It will have varied implications.
Rabinowitz said that developing an AI system, for example, is a covered activity and depends on factors like computing power or training of AI models—with outcomes showing them being either prohibited under law, or notifiable via properly filed notices to the Treasury.
“It depends on what the audience is if you're talking about the investment community,” he added. “Or, because the rules cover electronic ventures—a U.S. technology company that wants to partner with a Chinese, Russian technology company, can they do that? They're going to have to think about investment regulations and how it applies.
“For U.S. tech entrepreneurs who are serving on boards of companies, that might be directing investment decisions in matters to them on an individual basis that they need to comply with the rules in connection with boards they serve on or other businesses they have aside from their own sort of core U.S. business.”
