Line an 8 x 8-inch pan with parchment paper and set aside.

In a small bowl, add half of the water and sprinkle the gelatin powder on top. Let it sit for 10 minutes to soak up some liquid and become slightly gooey.

In a small saucepan, bring the remaining water and sweetener to a simmer over medium heat. Stir regularly until it begins to boil. Let it boil for several minutes, then remove from the heat.

Add the gelatin mixture to the bowl of a stand mixer. On low speed, turn the mixer on and mix for 30 seconds. Slowly add the boiling water/sweetener mixture along with the vanilla extract, and beat for 10-12 minutes, or until stiff peaks form.

Transfer the marshmallow mixture into the lined pan and use a rubber spatula to smooth it out as much as possible. Refrigerate for at least 2 hours or until set.

Once set, use a slightly wet knife to cut pieces. Dust with keto powdered sugar and enjoy.