Begin by measuring 9 cups of Chex cereal and placing it in a large mixing bowl. Break any large clusters.

In a medium saucepan, combine 1 cup of semi-sweet chocolate chips, 1/2 cup of smooth peanut butter, and 1/4 cup of butter. Heat over medium, stirring for 3-5 minutes until melted and smooth. Stir in 1 teaspoon of vanilla extract and let it cool slightly.

Pour the chocolate mixture over the Chex cereal in three stages. Gently fold the mixture to ensure all cereal is well coated.

In a large bag, combine 2 cups of powdered sugar and 1 cup of festive sanding sugar. Add the coated Chex cereal in batches, seal tightly, and shake to coat evenly with sugar.

Spread the chocolate-coated mixture on a baking sheet lined with parchment paper in a single layer. Let it set for at least 1 hour before storing.