Modern laser scanners, depth sensor devices and Dense Image Matching techniques allow for capturing of extensive point cloud datasets. While capturing has become more user-friendly, the size of registered point clouds results in large datasets which pose challenges for processing, storage and visualization. This paper presents a decomposition scheme using oriented KD trees and the wavelet transform for unordered point clouds. Taking inspiration from image pyramids, the decomposition scheme comes with a Level of Detail representation where higher-levels are progressively reconstructed from lower ones, thus making it suitable for streaming and continuous Level of Detail. Furthermore, the decomposed representation allows common compression techniques to achieve higher compression ratios by modifying the underlying frequency data at the cost of geometric accuracy and therefore allows for flexible lossy compression. After introducing this novel decomposition scheme, results are discussed to show how it deals with data captured from different sources.