Place pistachios and water in a small pot. Bring to a boil, then boil for 3 minutes. Drain and set on a clean tea towel. Pull the towel over the nuts and rub them gently to remove the pistachio skin. Discard the pistachio skins.

Add the pistachios to the bowl of a small food processor with the warmed milk. Allow them to soak for about 30 minutes to help infuse the pistachio flavor. Then, process for about 5-10 minutes, depending on the strength of your food processor, scraping the bowl down often, or until the mixture resembles a smooth nut butter.

Preheat the oven to 350°F. Grease a 9 inch round cake pan and line the bottom with parchment paper.

In a medium bowl, whisk together flour, sugar, baking powder, baking soda, and salt.

In a separate large bowl, whisk together the pistachio butter, oil, eggs, yogurt, and vanilla extract until evenly incorporated.

Add the dry ingredients to the wet ingredients. Mix just until combined.

Pour the batter into the prepared pan and smooth the top. Bake for about 25-30 minutes or until a toothpick inserted into the center comes out clean. Remove the cake from the oven and allow to cool in the pan for about 20 minutes, then transfer to a wire rack to finish cooling.

Place cream cheese and butter in the bowl of a stand mixer fitted with the whisk attachment. Beat on medium-high speed until smooth and fluffy.

Add powdered sugar and vanilla and beat until smooth and light.

Once the cake is cooled, spread frosting on top. Garnish with crushed pistachios, if desired.