This recipe works fine with smooth or crunchy peanut butter. This is really up to you, your personal preference and what you have available. I like to use crunchy peanut butter for a bit of added texture. The type of peanut butter you use may have an impact on the finished product, especially the frosting. This is become the consistency of store bought nut butters can vary dramatically. This is why I strongly recommend adding the milk slowly to the frosting and judging the consistency as you go!