There is no reason to believe that a properly functioning ADC-DAC process will audibly degrade the signal. In fact, today, even measurable degradation is only very slight on good hardware examples.
There have been many perceptual tests, using double blinded methodology, that demonstrate that the ADC-DAC process has no audible effect! It has been done on large scale basis with studio master tapes, using many trained audio professionals, with no one having statistically significant ability to determine difference past guessing. The same has been done for vinyl, on small scale, on what was considered very high end analog system. The same has been done on large scale, in a peer reviewed JAES article that studied the audible effect of running high res (SACD/DVD-A) sourced analog out through a CD format(44.1/16) ADC-DAC loop. The result was that NO audible effect occurred, and this was a quite ordinary/average loop. The ADC-DAC stages used in many receivers now are of absurdly high quality using high end chips just so they can use it as a selling point on their marketing brochures.
If you have a real audible effect, it is a result of improper settings(whether user error or forced system auto settings) or defective equipment. Assuming proper settings, the main result of having this ADC-DAC loop is psychological; just perceived difference, not real difference.
BTW, I have a 2 channel system of extraordinary reproduction ability in terms of realism in all aspects. I also have a rather higher end turntable on my system. My system is routed through an active DSP xover/processing system. It's a fully active 3 way system. This involves all signals from the pre-amp being input to the ADC of the DSP xover. I can tell you that absolutely no audible degradation occurs as a result of this; if it did, I would never use it! These speakers used to have passive crossovers(these speakers are of my own design), but I upgraded to full active digital some time back and the only changes I experienced were for the better, by far. My system is also in an extremely superb acoustic space; I have a substantial number of acoustical treatments at my disposal, so I can tell you that my room is very resolving, no question. For me to go 'full analog' would be a huge downgrade in sound quality.
-Chris