Yes, even though you have not withdrawn your interest from the Donut app, you still need to report it on your tax return. You are correct in that the interest was not paid by a traditional bank; however, based on your post, it has the characteristics of interest in that it was income earned on assets held and owned by you. Thus, it seems reasonable to report this income as interest.
Regarding the uncommon situations screen, it appears that none of them apply to you, so you can select the option None of these apply. Thereafter, this interest will appear on Schedule B to Form 1040.
@chatumoh
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