Cream butter in the bowl of an electric mixture until completely smooth and creamy. With the mixer on low speed, add in powdered sugar slowly. Gradually increase mixer speed and add vanilla and coconut extracts, then beat for 2-3 minutes, scraping down sides and bottom of the bowl. Continue to whip for another 4-5 minutes, continuously scrapping. If frosting is too thick, add coconut milk 1 teaspoon at a time until desired consistency is reached If it’s too thin, add powdered sugar gradually until it thickens. Fold in shredded coconut and mix until just combined. Frost cupcakes, then sprinkle toasted coconut on top.