Preheat your oven to 350°F (175°C). Grease and flour two 8-inch round cake pans, then line the bottoms with parchment paper. Set aside.

In a large bowl, whisk together the flour, granulated sugar, baking powder, and salt. Make a well in the center.

In a separate medium bowl, cream the softened butter with an electric mixer until light and fluffy. Beat in the eggs one at a time, mixing well after each addition. Stir in the coconut milk, vanilla extract, and coconut extract (if using) until just combined.

Pour the wet ingredients into the dry ingredients and mix on low speed with the electric mixer, or by hand with a spatula, until just combined and no streaks of flour remain. Be careful not to overmix.

Divide the batter evenly between the prepared cake pans. Bake for 25-30 minutes, or until a wooden skewer inserted into the center comes out clean. Let the cakes cool in the pans for 10-15 minutes before inverting them onto a wire rack to cool completely.

In a small saucepan, whisk together the full-fat coconut milk, granulated sugar, cornstarch, and egg yolks until smooth.

Place the saucepan over medium heat and cook, whisking constantly, until the mixture thickens significantly and comes to a gentle boil. Continue to whisk for 1 minute more. Remove from heat.

Stir in the cold butter pieces until melted and smooth. Add the vanilla extract and shredded sweetened coconut. Transfer the filling to a heatproof bowl, cover the surface directly with plastic wrap to prevent a skin from forming, and chill in the refrigerator until completely cold and firm (at least 1-2 hours).

In a large mixing bowl, beat the softened cream cheese and softened butter together with an electric mixer until smooth and creamy.

Gradually add the sifted powdered sugar, 1 cup at a time, beating until combined. Add the coconut milk, vanilla extract, and coconut extract (if using), and beat on high speed until the frosting is light, fluffy, and smooth. If the frosting is too thick, add a little more coconut milk (1 tsp at a time); if too thin, add more powdered sugar.

Once the cake layers are completely cool and the filling is chilled, use a serrated knife to level the tops of the cake layers if necessary.

Place one cake layer on your serving plate or cake stand. Spread the chilled coconut filling evenly over the top, leaving a small border around the edge.

Carefully place the second cake layer on top of the filling.

Apply a thin layer of cream cheese coconut frosting all over the cake (top and sides) to create a crumb coat. Chill the cake in the refrigerator for 15-20 minutes to set the crumb coat.

Once the crumb coat is set, apply the remaining frosting to the top and sides of the cake, smoothing it with an offset spatula.

Press the toasted shredded coconut gently onto the sides and/or top of the cake for garnish.

Chill the cake in the refrigerator for at least 30 minutes before serving to allow the frosting to set. For best flavor, bring to room temperature for 15-20 minutes before serving.