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Very finely chop hazelnuts in a blender (make sure it is a very fine chop but not pulverized) set aside.
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Cream butter and sugar together until light and fluffy.
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Add the vanilla, mixing to combine.
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Gradually add the flour and hazelnuts to the wet ingredients, making sure all is thoroughly combined.
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Cover and chill in the refrigerator 2 hours or overnight.
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Preheat oven to 350°F.
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With hands, take about a tbsp of dough and roll into a rope shape.
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Twist on cookie sheet into a half moon to form a crescent shape.
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Bake for 10 minutes (do not brown).
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Let sit on cookie sheet for 5 minutes (cookies will be fragile).
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CAREFULLY roll in powdered sugar while still warm, then place on cooling rack to cool completely.
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Once completely cooled, roll in powdered sugar a second time.
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Store in tightly covered container.