Using several bowls, separate the fruity pebble cereal by color.
Remove biscuits from the can (do not flatten) and use a 1-inch circle biscuit cutter to cut the holes out of the center of each biscuit.
Air fry the donuts at 350 degrees for 5 minutes.
Using a medium mixing bowl, combine the powder sugar, milk and vanilla and mix with a whisk until smooth and combined.
Dip the donut into the icing to coat the top.
Lightly shake the donut to get rid of excess frosting.
Place the dipped donut onto the cookie sheet.
Sprinkle shredded coconut onto the bottom half of the donut.
Starting with your red fruity pebble, place a layer of the red on the top of the donut.
Repeat steps with the orange, yellow, green blue and purple until you have a complete rainbow.
Place a few gold sequin sprinkles where the rainbow meets the shredded coconut to create the 'pot of gold.'
Let donut icing harden for about 5 minutes before enjoying!