It uses the standard USB Audio CODEC. For some reason, at work on a Win2000 system, I'm able to use Kernel Streaming out of foobar2k for, presumably, bitperfect output that passes kmixer nastiness. (I'm assuming this, not any expert). But for some reason at home, on my WinXP desktop and notebook, Kernel Streaming doesnt work, and I need to resort to DirectSound or waveOut, which doesn't sound as good to me (but frankly, may simply be in my head.)
I tried this with the microdac, comparing its usb interface to a bitperfect soundcard's optical interface. There was a slight difference in sound. WHen using the soundblaster MP3+ as a transport there was better treble extension, and more low level detail than when directly connecting the dac via usb. The big difference is that the worst offender, the rest of the soundblaster line, does its own internal resampling. I think thats where the biggest hit in sound quality happens, but kmixer does muddy things a little bit.