Step 1

Place yeast into the mixing bowl of a large stand mixer. Whisk in warm water and let stand until a creamy foam forms on top, about 5 minutes. Add salt, sugar, milk, 2 tablespoons melted butter, vanilla extract, egg, and nutmeg. Whisk mixture thoroughly. Pour flour on top of liquid ingredients. Place mixing bowl onto mixer.

Step 2

Attach dough hook to mixer and knead on low speed until dough comes together in a ball and becomes soft and sticky, about 3 minutes. Dough will stick to the hook and pull away from the side of the bowl.

Step 3

Transfer dough to a floured work surface, knead 2 or 3 times, and shape into a ball. Wrap dough in plastic and refrigerate for 20 minutes to let gluten relax.

Step 4

Remove dough from refrigerator, unwrap, and dust lightly with flour. Roll out into a 9x18-inch rectangle about 1/4 inch thick. Evenly spread 6 tablespoons softened unsalted butter onto the middle third of the dough. Fold one unbuttered third over the buttered third and press lightly; spread remaining 6 tablespoons of unsalted button on top of that third. Fold remaining third over the first (buttered) third. Transfer dough onto a sheet pan, cover lightly with plastic wrap and a kitchen towel, and refrigerate 20 to 30 more minutes for butter to become firm. Sprinkle dough lightly with flour as you work if it becomes sticky.

Step 5

Return dough to floured work surface and pat very gently into an 8x14 rectangle about 1/2-inch thick. Fold outer thirds over center third as before; roll out into an 8x14-inch rectangle again. Keep edges of rectangle as straight as possible. Fold in thirds as before. Cover dough lightly with a kitchen towel, and refrigerate for 2 hours.

Step 6

Roll the dough out to about 3/8 inch thick. Cut dough in half crosswise. Leave half on a lightly floured work surface; refrigerate other half of dough until needed.

Step 7

Use a sharp 3-inch circular cutter to cut 8 circles of dough from piece on the work surface. Use 1-inch size cutter to cut the donut holes out of the dough circles.

Step 8

Line a baking sheet with waxed paper and sprinkle lightly with flour. Arrange cronuts and holes onto prepared baking sheet. Let rise in a draft-free, warm place (such as an unheated oven) until doubled in size, about 1 hour.