Line an 8 x 8 inch cake pan with parchment paper. Allow the paper to hang over the edges for easy removal. Set aside. Place the caramels in a medium saucepan over low heat. Add the butter and the keto milk (or heavy cream) Stir continuously 7 to 10 minutes or until the caramels are completely melted and smooth.
Times will vary depending on the heat of the stovetop. Stir in the nuts or nut free substitute until they are fully coated. You can also leave the nuts/add-ins out completely and keep the caramel plain if desired. Stir constantly for 1 minutes. Stir in the vanilla and baking soda until the baking soda is fully dissolved and smooth.
Pour the mixture into the prepared pan. Work very quickly and evenly spread the mixture in an even thin layer throughout the pan. Allow to cool 30 minutes or until room temperature. After 30 minutes, grasp the overhanging paper and transfer the caramel to a clean worksurface.
Keep the paper attached to the caramel. Place the marshmallows in 2 rows to one side of the caramel. Use the paper as a guide and carefully roll the caramel into a tight log. Wrap the paper tightly around the log. Refrigerate 30 minutes or until the log is firm.
Remove from the refrigerator and loosen the paper from the roll. Wrap the paper back around the roll and refrigerate another 30 minutes or until firm enough to easily slice. Remove from the refrigerator and slice into desired size pieces.