Measure the rice cereal into a large mixing bowl and set aside.

In a microwave-safe bowl, combine the chocolate chips, peanut butter, and butter.

Microwave the mixture in 30-second intervals, stirring between each, until smooth and fully melted.

Stir the vanilla extract into the melted chocolate mixture.

Pour the chocolate mixture over the cereal and fold gently with a spatula until every piece of cereal is evenly coated.

Place the powdered sugar into a large resealable plastic bag or a container with a lid.

Add the coated cereal to the bag, seal tightly, and shake vigorously until the cereal is uniformly covered in sugar.

Spread the mixture onto wax paper to cool and set before serving.