That’s my understanding as well — cloud streaming refers to FLAC files. However, one must also consider whether the Taiko Router (or full Taiko network stack) and DCD are present or not.
Since according to
@ray-dude (Oct. 2024) ‘Skip internal storage on the Olympus Server, streaming music or playing music from your NAS or file server sounds better than music on internal storage’. ‘Stick with Redbook or 96k music for the best sound quality on Olympus’
And
@Christiaan Punter ’adding an internal storage drive to the Olympus
very slightly degrades overall SQ compared to using no storage and relying solely on a NAS’. Did you try? You use XDMI and not USB when local wav sounds best?