Blocknox, a subsidiary of second-largest German stock exchange Boerse Stuttgart, is expanding its cryptocurrency custody service to institutional players.

According to an announcement from the bourse on Tuesday, Blocknox already provides custody for crypto assets on an "escrow basis" and has made the service available to users of Boerse Stuttgart's BISON app and its digital assets exchange, BSDEX.

The firm is now aiming to expand its services outside the group's own offerings, planning to safeguard cryptocurrencies and "other digital assets" for institutional clients such as banks and asset managers.

“As a pioneer in Germany, Blocknox has already been operating as a custodian of cryptocurrencies for more than one year," said Dr. Ulli Spankowski, managing director of Blocknox and chief digital officer for the boerse. "Now we want institutional clients to benefit from our experience and set-up as well. They can use Blocknox’s reliable custody as a building block for their own services around digital assets.”

The firm said it has already built and deployed a "multilevel security concept" to protect assets under custody.

With new rules for Germany-based cryptocurrency services introduced in early January, Blocknox said it has already informed regulators of its intent to apply for a license, which means it can offer custody services on a provisional basis. The firm plans to submit the final application before the set deadline to become a regulated financial services provider.

Spankowski said the new rules will bring "further professionalisation" to the crypto industry and will likely encourage more institutions to enter the market.