The Signal
Treasury Proposes Wider Controls on Quantum Investment
Treasury has proposed expanding outbound investment restrictions to cover software and algorithms for quantum technologies, alongside controls on quantum hardware and related systems. The proposal is open for public comment through December
Quantum.world Team · Written with AI · fact-checked ·
Treasury’s October 22 proposal would widen U.S. investment restrictions tied to quantum technology. It would add quantum-computing software and algorithms to prohibitions that already cover quantum computers, critical components and specified sensing and communications systems. The proposal is not yet in force, and Treasury is asking for public comment.
Algorithms join controls already covering quantum hardware
The draft treats quantum information technologies as prohibited technology, rather than creating a separate lower-risk notification tier. Covered activities would include developing a quantum computer, making components needed to produce or operate one, and developing software to design, simulate, test or control a quantum computer.
The proposal also names software used to identify, implement, cost or optimize quantum-computing algorithms and applications. Its operative text includes the development of “any algorithm or application for quantum information science technologies,” without an end-use limitation. The preamble discusses an intended end-use limitation and recognizes that similar technologies can have important civilian purposes, but that limitation does not appear in the proposed operative language.
Existing restrictions are not a blanket ban on quantum companies
Quantum technology already falls under outbound investment rules that took effect on January 2, 2025. Those rules prohibit certain covered transactions involving a foreign person in China, Hong Kong or Macau that develops a quantum computer or produces critical components, including a dilution refrigerator. They also cover specified quantum sensing platforms and quantum networks or communications systems designed or intended for military, government-intelligence or mass-surveillance uses, or to scale quantum computers or provide secure communications.
The new draft would broaden and specify that reach, but it would not prohibit every U.S. investment in every quantum business. The proposed restrictions apply to covered transactions involving a covered foreign person engaged in defined prohibited activities. The proposal lists exceptions, including investments in publicly traded securities and securities issued by registered investment companies, such as mutual funds and exchange-traded funds. Some exceptions would not apply to investments that provide governance rights beyond standard minority-shareholder protections.
Bessent casts the proposal as a security and investment balance
“The proposed regulations would strengthen the existing Outbound Investment Security Program to prevent our adversaries from using U.S. investment to develop critical technologies that threaten U.S. national security.”
Scott Bessent, Secretary of the Treasury
Treasury presents the proposal as an effort to restrict capital flows it considers a security risk while giving investors a chance to comment before the rules are finalized.
The broader framework implements the Comprehensive Outbound Investment Security (COINS) Act, passed as part of the Fiscal Year 2026 National Defense Authorization Act. The proposal addresses five sectors named in the act—semiconductors and microelectronics, artificial intelligence systems, quantum information technologies, high-performance computing and supercomputing, and hypersonic systems—and adds biotechnology. It would also extend the program to additional countries of concern beyond China, Hong Kong and Macau.
Current rules stay in place during the comment period
The draft would not replace the existing rules immediately. The proposed rule says the current regulations will continue to apply to activities from January 2, 2025, until the new final regulations take effect, and that the proposed provisions would not apply retroactively. Treasury has not set an effective date for the final rules.
Written comments are due December 7, 2026. Until Treasury reviews those comments and issues a final rule, U.S. investors remain subject to the existing quantum restrictions, not the expanded software and algorithm provisions in the proposal.