My understanding is that if you're using TOSLINK inferface for optical, it is bandwidth limited to 96KHz. This limitation is from the original Toshiba specification for this interface for optical cables. The port on the back of Modi 2 is a TOSLINK jack.
Here is a link to this here on HeadFi (see the original question and the answer):
http://www.head-fi.org/t/624052/24-192-dac-related-question#post_8636133
Also, the specs for Modi 2 state that 24/192 may not be possible on TOSLINK:
Modi 2 Uber: 16/44.1 to 24/192 via USB. 16/44.1 to 24/192 via Toslink* and Coax.
*Note: many optical transmitters cannot output 24/176 and 24/192 reliably
You're MUCH better off using digital if you're not going to use USB; it's bandwidth is considerably wider than TOSLINK optical, and it sound better as well. Even Absolute Sound does not recommend using TOSLINK for audio if it can be avoided:
"TosLink is still inferior to other digital interfaces, except perhaps adaptive USB (non-asynchronous). The reason is that TosLink is limited in bandwidth to 3MHz. Even the higher-end glass-fiber TosLink cables don't sound as good as coax or AES/EBU. The new fourth edition of The Complete Guide to High-End Audio still recommends avoiding TosLink if at all possible. Many cable boxes and satellite receivers offer only TosLink, however. –Answered by [COLOR=0088CC]Robert Harley
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October 07, 2012 6:22 p.m"
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