Whisk together flour, baking powder, and salt in a large bowl. Cut in cold butter with a pastry blender or your fingertips until the mixture resembles coarse crumbs.

In a separate small bowl, whisk together the warm milk and egg. Gradually add the wet ingredients to the dry ingredients, mixing with a fork until a shaggy dough forms.

Turn the dough onto a lightly floured surface and knead gently for 2-3 minutes until smooth and elastic, being careful not to over-knead. Place the dough in a lightly oiled bowl, cover, and let rest at room temperature for at least 30 minutes.

While the dough rests, heat vegetable oil in a deep pot to 350-375°F (175-190°C). Roll out the dough on a lightly floured surface to 1/8 to 1/4 inch thick and cut into 2-3 inch pieces.

Carefully place 3-4 dough pieces into the hot oil; they should puff up almost immediately. Fry for 1-2 minutes per side until golden brown and puffed, then remove with a slotted spoon and drain on paper towels.

In a shallow dish, combine granulated sugar and cinnamon. Toss the warm sopaipillas in the mixture until evenly coated and serve immediately.