Line a 9×9-inch square pan with parchment paper, leaving an overhang for easy removal.

In a medium saucepan over low heat, combine white chocolate chips, sweetened condensed milk, and butter; stir gently until smooth.

Remove from heat and stir in peppermint extract, salt, and red gel food coloring if using.

Fold in half of the crushed candy canes for minty ribbons throughout the fudge.

Pour the mixture into the prepared pan, tapping gently to remove air bubbles and smooth the surface.

Sprinkle remaining crushed candy canes and optional sprinkles or nuts over the top.

Refrigerate for at least 2 hours, until fully set.

Lift the fudge out using the parchment overhang, cut into 24 squares, wiping the knife clean between cuts.