In a medium saucepan over low heat, melt the white chocolate, stirring constantly until completely melted. Remove from heat. You may also melt the white chocolate in a microwave safe bowl in the microwave on HIGH in 20 second increments until completely melted and smooth.
Pour melted white chocolate over cereal and stir gently to coat.
Pour in the crushed candy canes and stir again until evenly dispersed.
Pour cereal into a large zip-top bag or large container with tight fitting lid. Add the powdered sugar. Shake until everything is coated. Spread onto baking sheet lined with foil or parchment and allow to cool. Discard excess powder. Store in an airtight container at room temperature up to two weeks.