New Bill Gives Treasury Power to Block U.S. Investments in Foreign Tech; Targets China's Military Sector

This new legislation, the Comprehensive Outbound Investment National Security Act of 2025, sets up a massive new regulatory framework giving the U.S. Treasury Department the authority to screen and, in some cases, outright prohibit American investments in certain foreign technology sectors. Think of it as the government putting up a financial fence to stop U.S. capital and expertise from inadvertently helping countries of concern—like China, Russia, and Iran—boost their military or surveillance capabilities. The focus is squarely on preventing U.S. money from flowing into areas like advanced semiconductors and Artificial Intelligence development overseas.

The New Rulebook for Your 401k and Venture Capital

At its core, the bill creates two new categories of foreign investment transactions, both tied to national security. The first is "prohibited technologies," which the Treasury Secretary can block entirely. If you’re a venture capitalist, a private equity firm, or even an individual investor, you could be barred from investing in specific foreign companies working on things like advanced AI algorithms or cutting-edge chip manufacturing if they’re tied to a geopolitical rival. Violating these prohibitions could land you with a civil fine or force you to sell the investment.

The second category is "notifiable technologies." For these, U.S. persons must submit a written notice to the Treasury Department within 30 days of completing the transaction. This is a massive compliance lift for financial institutions. If you work at a bank or a fund that invests internationally, your legal and compliance teams just got a whole lot busier. The bill explicitly defines exceptions for things like small investments and publicly traded securities, but the devil will be in the administrative details.

Staffing Up and Spending Big

To manage this entire new system, the bill authorizes $300 million in funding for the Treasury Department over the next two years. That’s a lot of cash dedicated to policing where American dollars go globally. Even more interesting is the provision granting the President and the Secretaries of Treasury and Commerce special hiring authority. This means they can bypass standard government hiring processes to quickly staff the new offices needed to implement this complex law. While the intent is speed, bypassing standard civil service rules always raises questions about transparency and accountability in staffing key regulatory positions.

Sanctions Without Supply Chain Chaos

Title II of the Act authorizes sanctions on specific foreign individuals and entities—the "covered foreign persons"—who are tied to China’s military-industrial or surveillance technology sectors. For investors, this means you are barred from making new investments in or purchasing debt or equity from these sanctioned entities. However, the bill includes a very specific carve-out: these sanctions cannot be used to block the importation of goods from these same companies. This is a crucial detail. It means the law is designed to hit the financial side of these entities without immediately disrupting the flow of consumer goods that might be manufactured by them and sold in the U.S. It’s a targeted financial strike, not a broad trade war.

This entire framework is set to sunset seven years after enactment, meaning Congress would have to actively renew it. For busy people, the takeaway is simple: the government is tightening the reins on where U.S. capital can flow internationally, particularly in high-tech sectors, and your investment options, especially in emerging markets, are about to get a lot more complicated and compliance-heavy.