FOOD FOR THOUGHT!!!
The reason for that loop is to provide a tie down point for the rear of the vehicle.
IF (hopefully never) your car had to go on a rollback there would be NO PLACE to secure the rear except possibly the suspension which would do extensive damage. Also (hopefully never) you needed to be pulled from the rear the same would apply.
Your manual explains the procedure for removing the lower grille section and exposing the point on the front.
MY Turbo Beetle had a 2 inch disk that snapped out of the front bumper and a tow loop screwed into the frame for the front and the same loop as we have was on the rear.
VW did make a neat plastic cover to "Blacken Out" the loop. No, I have not tried to see if a VW one would work.
And yes, I painted mine on REDCROSS black using spray undercoat.