Place powdered sugar in a large airtight container or plastic zippered bag; set aside.

In a large pot, heat chocolate, butterscotch chips and peanut butter over low heat. Stir often until mixture is melted and thoroughly combined, approximately 5-8 minutes. Remove from heat and carefully stir in cereal until evenly coated. Pour mixture into prepared container or bag, seal tightly, and shake to coat. Pour out onto a large piece of wax paper and allow to cool for 15 minutes before serving.