U.S. Treasury proposes banning Americans from investing in companies in China and four other countries that develop biologic medicines, neural interfaces, software for studying biological systems, and automated laboratory equipment; drug licensing deals are excluded

U.S. Treasury proposes banning Americans from investing in companies in China and four other countries that develop biologic medicines, neural interfaces, software for studying biological systems, and automated laboratory equipment; drug licensing deals are excluded

On October 22, the Treasury Department published proposed rules under the COINS Act. The rules would prohibit Americans from acquiring equity stakes in such companies in China, Russia, Iran, North Korea, and Cuba or forming joint ventures with them. Comments are due by December 7, and the law requires final rules by March 13, 2027.

The COINS Act directs Treasury to restrict American investment in companies in these countries across five fields, including semiconductors and AI. Treasury itself added biotechnology, using its authority to include technologies that strengthen these countries’ military, intelligence, surveillance, or cyber capabilities. It cites risks including biological weapons proliferation, the development of neural interfaces, and threats to the security of U.S. supply chains.

The ban would cover companies developing biologic medicines, including cell and gene therapies; neural interfaces, from implants to external devices; certain instruments for reading DNA and RNA, sorting cells, and analyzing proteins; software for studying biological systems; and equipment, robots, and software for automated scientific experiments. Purchases of securities traded on exchanges or over the counter in any country, as well as shares in investment funds, would be allowed if they confer no governance rights beyond protections for minority shareholders.

Assistant Treasury Secretary Christopher Pilkerton explained to Reuters why the restrictions target investment: “It’s about the network, the supply chain, and everything of that kind that comes with an investment.” Such networks of relationships, he said, are difficult to regulate through export controls. Treasury acknowledges that the ban could harm U.S. security if it creates serious public health risks or harms U.S. companies in the sector, and asks whether its coverage of medicines should be narrowed to advanced technologies.

Licensing deals in which a U.S. pharmaceutical company acquires rights to a Chinese drug would fall outside the rule, a Treasury spokesperson said. According to data from investment bank Locust Walk, Chinese-developed drugs have accounted for 58% of the global value of licensing deals since the start of 2026, including future development milestone payments. Treasury defines a joint venture as an agreement in which two parties contribute money or assets and share profits and losses, even without creating a new company. The spokesperson declined to clarify whether this would cover the joint development and sale of drugs.

On October 16, China proposed banning transfers to foreign owners of platforms for cell and gene therapies and short RNA drugs, meaning sets of core technologies used to develop multiple drugs. As in the U.S. proposal, licenses that do not transfer ownership would fall outside the ban. On October 24, China’s Ministry of Commerce called Treasury’s proposal “a typical example of an overly broad interpretation of national security” and reserved the right to take action.

John Crowley, head of the biotechnology industry association BIO, warned that overly broad rules would create uncertainty for investors. John Moolenaar, chair of the House Select Committee on China, called the inclusion of biotechnology in the proposal a victory and urged passage of his bill, which would extend the rules to acquiring licenses for prohibited technology from companies in these countries.