Drain the cashews and add all the ingredients and only 3/4 of the can of diced green chiles to a high-speed blender, like a Vitamix or Blendtec. Blend for at least 2-3 minutes, scraping down the sides occasionally, until it is completely smooth. If you want it runnier, add more vegetable broth.
Pour the sauce into a pot and heat it on the stove over medium low heat. Make sure to whisk constantly. Only heat it for a few minutes because it will start to get chunky if you do it too long. You just want to heat it until it slightly thickens and is warmed through, so watch it carefully.
Pour into a bowl and add the leftover diced green chiles. Stir to combine. Sprinkle some smoked paprika on top if you wish.
Serve this as a dip with your favorite tortilla chips, as nachos, over tacos, or in burrito bowls!
Store in an airtight container in the fridge. It will thicken as it sits, so just stir well.
Enjoy! (recipe adapted from The Vegan 8)